Local corruption and financial regulators’ exit option: A utility approach
Abstract
This paper investigates the impact of local corruption on the career decisions of financial regulators, focusing on their choice to exit public service. We develop a novel utility-based model that demonstrates how corruption in local government reduces the utility of remaining in regulatory roles, thereby increasing the likelihood of regulators’ departure. Our empirical analysis, based on a comprehensive dataset on 1,914 SEC financial regulators, robustly confirms this relationship. Our findings underscore the importance of institutional quality in retaining skilled regulators essential for effective oversight and public policy implementation.
Fields of Study & Subjects
Corruption and Economic Development
Fiscal Policies and Political Economy
Auditing
Earnings Management
Governance
Publication details
- Journal / source
- Journal of Behavioral and Experimental Finance
- Volume
- 49
- Pages
- 101140–101140
- Publication date
- 8 January 2026
- Language
- EN