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Regulatory competition and rules/principles-based regulation

Frantz, Pascal and Instefjord, Norvald (2018) Regulatory competition and rules/principles-based regulation. Journal of Business Finance and Accounting. ISSN 0306-686X

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Identification Number: 10.1111/jbfa.12313

Abstract

This paper analyses how regulatory competition affects principles‐based and rules‐based systems of regulation. Competition between regulators creates the possibility of regulatory arbitrage that generates a race to the bottom by regulators that is socially harmful. We derive the welfare effects of such competition and the regulatory response to these effects, in particular, regulatory harmonisation. We find, however, that regulators can adopt harmful regulatory harmonisation. These effects can make coordination efforts in developing global regulation socially desirable. We demonstrate, moreover, that corporate lobbying is not always harmful: it can both encourage and discourage socially desirable regulation.

Item Type: Article
Official URL: https://onlinelibrary.wiley.com/journal/14685957
Additional Information: © 2018 Blackwell Publishing
Divisions: Accounting
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
JEL classification: G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
Sets: Departments > Accounting
Date Deposited: 19 Mar 2018 16:55
Last Modified: 19 Mar 2018 16:56
URI: http://eprints.lse.ac.uk/id/eprint/87301

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