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Friday, October 27

Dueling Market Power: The politics of stock exchange delisting in the transatlantic space
12:00 pm to 1:30 pm
Abe Newman, Director, Mortara Center for International Studies, Georgetown University; Chair, European Union Studies Association
4500 Wesley W. Posvar Hall
Sponsored by:
European Studies Center and European Union Center of Excellence along with Department of Political Science

Economic great powers export domestic regulatory policies and force the costs of adjustment onto foreign firms and governments. Such arguments about market power regularly examine economic great powers in isolation and, thus, have less to say about a world governed increasingly by economic multipolarity. In their paper, Dr. Newman and his associates argue that a great power’s ability to force foreign actors into adjusting is not only conditioned by their relative economic clout but also by the political institutions that govern their markets. Specifically, they expect that where states choose to draw their jurisdictional boundaries directly shapes a polity’s global influence. When a polity expands its jurisdiction, harmonizing rules across otherwise distinct sub-national, or national markets, it can curtail a rival’s authority. They test the theory by assessing foreign firm delisting decisions from US stock markets after the adoption of the Sarbanes-Oxley accounting legislation. The Act, which included an exogenous, extraterritorial shock, follows the harmonization of stock market governance across various European jurisdictions. Econometric analysis of firm-level data illustrates that EU-based companies, which benefited from jurisdictional expansion, were substantially more likely to leave the American market and avoid adjustment pressures. Their findings contribute to debates on extraterritorial governance and authority in a transnational economy, highlight the critical role played by institutions in economic statecraft, nuance arguments about Europe as an international actor and provide evidence in favor of more relational theorizing in International Relations that examines the nexus of market access, political authority and compliance.