This project investigates and measures the financial effects of Australian statute law governing the corporate activities of companies listed on the Australian Stock Exchange (ASX). This assists in distinguishing law intervention value shifts from correlated influences to those that are causative. In turn, it can support the identification of potential unintended consequences of new or amended statute law.
Drafting statute law involves balancing legal definitions and related statutory provisions against impacts of enforcing the law that may be unintended and potentially socially harmful or unnecessary. The aim of this project is to investigate and measure the financial effects of Australian statute law governing the corporate activities of companies listed on the Australian Stock Exchange (ASX).
The question this research seeks to answer is: ‘Is it possible to enact laws that, based on statistically derived conclusions, are able to attain their objectives while minimising impact on shareholder wealth?’ Correspondingly, ‘can these laws be drafted in ways that render them as much as possible independent of economic impact, especially when the relevant provisions are punitive?’ The corollary of this is to ask: ‘What kind of regulatory design can be developed which is more influential and less punitive?’
The project seeks to identify those features of law design that sit between the two poles of intricate statutory obligation and industry self-regulation. This assists in distinguishing law intervention value shifts from correlated influences to those that are causative. In turn, it can support the identification of potential unintended consequences of new or amended statute law.
The project uses an event study methodology through regression analysis of ASX company datasets and suitable software tools. Australian Company Announcements data are sourced from Rozetta Institute [formerly Securities Industry Research Centre of Asia-Pacific (SIRCA)] database, which are compiled from company announcements issued by the Australian Securities Exchange. Relevant share value data comes from Morningstar.
By conducting research that gradually extends to diverse statutory provisions, this project seeks to enhance awareness on the part of regulators as to the most effective and least economically invasive design practices.
Project objectives:
- Investigate multiple instances of intervention by authorities using their various statutory powers.
- Identify events that comprehensively describe the impacts of the statutory regulation on ASX listed companies.
- Isolate key law design features that have unintended pejorative impacts that could have been avoided using alternative design features.
Lead researcher:
Enrico Mercuri (UNSW CSE)
Industry partners:
Frisk, Apex Arcana