In this thesis, I examine the effects of noncompliance with securities laws on financial reporting quality and director turnover. The thesis consists of three main chapters. Chapter 2 introduces the enforcement actions brought by the Securities and Exchange Commission (SEC), based on which I collect data on noncompliance cases. It also describes the data collection process and reports summary statistics for noncompliance cases. It contributes to our understanding of the SEC’s enforcement actions. The dataset is used in examining the effects of noncompliance with regulations on financial reporting quality and director turnover in Chapters 3 and 4, respectively. Chapter 3 investigates the association between noncompliance with securities laws and financial reporting quality. Compliance control and financial reporting quality are two overlapping aspects of control within the integrated internal control framework. I explore the association between compliance control and financial reporting quality by testing whether the rate of financial reporting problems is higher for firms that fail to comply with securities laws. I find that firms not complying with securities laws have significantly higher rates of financial reporting problems than control firms that do not violate securities laws. Furthermore, the results show that the effect is much stronger for accounting frauds than for accounting restatements, and the evidence is more pronounced in the post-noncompliance (with securities laws) windows than in the pre-noncompliance windows. This chapter presents the first empirical examination of the link between the compliance aspect of internal control and financial accounting problems. Chapter 4 investigates director turnover surrounding noncompliance events. While directors are expected to play a disciplining role, the evidence is still limited on this. I examine directors’ reactions to firm misconduct around the time when firms start to violate securities laws. I find, in general, that firms that failed to comply with securities laws (noncompliant firms) have significantly higher director turnover rates around the start of noncompliant than control firms. Noncompliant firms are also more likely to have unexpectedly departing directors around the start of noncompliance. When outside directors are examined separately, significantly higher director turnover is observed only for the pre-noncompliance period and not for the post-noncompliance period. These results suggest that directors are more likely to leave a firm if they perceive wrongdoing, while outside directors tend to leave before they could possibly be involved in the firm’s wrongdoing.

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In 1866, the Hong Kong colonial government imposed stamp duty on written instruments. The tax was imposed for 132 years during the British rule of Hong Kong and was retained by the Hong Kong Special Administrative Region after the 1997 transfer of sovereignty over Hong Kong from Britain to China. Despite the vast number of textbooks written on the application of the contemporary Hong Kong stamp duty law, little is known about the driving forces that lay behind the first imposition of stamp duty in Hong Kong and the forces that shaped its development in the nineteenth and twentieth centuries. Little is revealed by the successes or failures of various stamp duty laws enacted to fulfil these forces. In order to deal with the knowledge gaps, this study uses the legal historical method and the legal comparative method to reconstruct an interpretation of stamp duty legal history for investigation. The study reveals that the first imposition of the tax was driven by the primary imperative to raise revenue followed by a secondary demand for social equity. It also reveals that the provisions of the first Hong Kong stamp duty legislation were influenced by local political demands occasioned by events leading to the American Revolution in the eighteenth century. The study demonstrates that, along with the dominant financial impetus, other social, economic, political, sustainability and pragmatic forces also shaped the stamp duty system under British rule. Social and economic forces supplemented the financial impetus from the 1960s onwards as key drivers for stamp duty legislative change. The study examines the explicit and discerned objectives of various historical Hong Kong Stamp Ordinances in terms of the actual outcomes. The analysis reveals many novel lessons in stamp duty system design. The study also demonstrates that Hong Kong should not abolish its stamp duty system at the present time.