Techniques for evaluating regulatory change

Abstract

This paper demonstrates the applicability of two empirical techniques—the Heckman two-stage switching regression and the event study methodology—for evaluating regulatory or legislative change relating to companies and in particular to the regulation of company reporting. These techniques measure the impact of regulatory changes once they have happened. They could be used in practice if regulatory changes were subject to a review procedure. The availability of these relatively sophisticated techniques should encourage the quantitative analysis of regulatory changes. Comparisons of effects across member states of the European Union would be interesting but would obviously need care.