Regulatory Risk

Dear Colleagues,

The government plays a vital role in our economy. Prior research has primarily explored the negative economic effects of regulation on corporations. First, regulation creates high compliance costs that significantly burden corporations and adversely affect their business activities. Second, regulation is associated with higher risk and uncertainty, which increase the value of an option to wait. In response, firms are likely to postpone their investments and other value-creation activities. They may also obfuscate information and lobby regulators to mitigate the negative effects. Third, government agents enforcing regulation may have interests misaligned with those of regulators, resulting in inefficiency in the government system. Conversely, regulation may benefit the economy and corporations. Regulation constrains corporate self-dealing behaviors and reduces agency costs. Regulation can also encourage fair competition by reducing the monopoly power of large corporations and providing high-quality information to investors. Finally, regulation may create synergies in mergers and acquisitions because the combined firms could be subject to lower regulatory costs than two stand-alone firms.

This Special Issue of JFRM attempts to deepen our understanding of the impact of regulation on firm-specific policies and aggregate economic activities. We seek research on the heterogenous effect of regulation on corporations, the link between regulation and aggregate economic output, and how firms hedge against regulation risk under various circumstances. We especially encourage research on the effect of regulation conditional on firm-specific characteristics at the micro-level and during different time frames at the macro-level, which may potentially help us reconcile the positive and negative views of regulation on economic development. Both empirical and theoretical studies are welcome, with a preference for the former.

Dr. Hui Liang James
Prof. Dr. Vivek K. Pandey
Prof. Dr. Hongxia Wang
Guest Editors

Manuscript Submission Information

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Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

• regulation
• firm performance
• productivity
• risk management
• regulatory burden
• regulation enforcement