Essays on law and economics

This dissertation is composed of two empirical essays on law and economics. The first is coauthored with Alexander J. MacKay and analyzes the empirical effects of minimum resale price maintenance (RPM) across a broad variety of household products. Using state-by-state variation in antitrust law in the wake of the 2007 Leegin Supreme Court decision, we find that prices increased in states where minimum RPM is treated under the rule of reason. We also find that price increases are most often combined with quantity decreases, which is consistent with anticompetitive uses of minimum RPM. We estimate a 3.8% decrease in revenues. The second essay looks at the effects of Sarbanes-Oxley on the practice known as Earnings Management. I find that the previous discontinuity in reported earnings per share (EPS) at 0¢ and 1¢ disappears following a major reform resulting from Sarbanes-Oxley. Additionally, short-term abnormal returns to reporting 1¢ earnings per share decrease following this reform. Abnormal accruals, as determined by a modified Jones model, have a statistically but not economically significant effect on the likelihood of a firm reporting 0¢ or 1¢ EPS.