In the paper, Does the Revolving Door Affect the SEC’s Enforcement Outcomes?, which was recently made publicly available on SSRN, my co-authors (Ed DeHaan of the University of Washington, Kevin Koh of Nanyang Technological University, and Shivaram Rajgopal of Emory University) and I examine whether revolving doors are associated with compromised regulatory oversight by the SEC. In particular, we investigate whether regulatory enforcement against financial reporting fraud is influenced by the future job prospects of prosecuting SEC lawyers. Revolving doors lead to both the SEC hiring officials from firms that they regulate as well as SEC officials leaving to work for firms that are regulated. The revolving door exists because (i) the SEC needs industry specific expertise to regulate its constituents effectively, and (ii) regulated firms value experience and knowledge of complex regulations to minimize their cost of compliance.

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