Enforcement of Financial Reporting Regulation: Insights From New Data

We collect new data on the enforcement of reporting regulation. Our data is novel in two ways: we substantially expand the scope and the time-series coverage of existing datasets. It includes 32 enforcement variables measured from 2005 to 2022 in 29 European countries. Based on these data, we document two stylized facts. First, in terms of the level of enforcement, we observe contrasting patterns for enforcement “on the book” and “in practice”. While the former appears to have increased over recent years, the latter exhibits the opposite trend. Second, we observe that the variation in enforcement has decreased significantly over time. While there is a downward trend for both enforcement “on the books” and enforcement in “in practice”, the decrease is much more pronounced for the latter. These patterns have potential implications for our understanding of the recent evolution of the European enforcement system, which could provide potential lessons for other jurisdictions.