Measuring the Cost of Regulation: A Text-Based Approach
Abstract
Abstract We derive a measure of firm-level regulatory exposure from corporate earnings calls text and study its effects on growth, leverage, profitability, and equity returns. Higher regulatory exposure results in slower sales and asset growth, lower leverage, reduced profitability, and higher post-call equity returns. Most of these effects are mitigated for larger firms. We validate our measure by showing its explanatory power for cross-sectional stock returns during the 2016 Presidential election.
Fields of Study & Subjects
Auditing
Earnings Management
Governance
Corporate Finance and Governance
Publication details
- Journal / source
- Journal of Financial and Quantitative Analysis
- Publisher
- Cambridge University Press (CUP)
- Pages
- 1–38
- Publication date
- 24 June 2026
- Language
- EN