Measuring and Modeling the U.S. Regulatory Ecosystem

Over the last 23 years, the U.S. Securities and Exchange Commission has required over 34,000 companies to file over 165,000 annual reports. These reports, the so-called "Form 10-Ks," contain a characterization of a company's financial performance and its risks, including the regulatory environment in which a company operates. In this paper, we analyze over 4.5 million references to U.S. Federal Acts and Agencies contained within these reports to measure the regulatory ecosystem, in which companies are organisms inhabiting a regulatory environment. While individuals across the political, economic, and academic world frequently refer to trends in this regulatory ecosystem, far less attention has been paid to supporting such claims with large-scale, longitudinal data. In this paper, in addition to positing a model of regulatory ecosystems, we document an increase in the regulatory energy per filing, i.e., a warming "temperature." We also find that the diversity of the regulatory ecosystem has been increasing over the past two decades. These findings support the claim that regulatory activity and complexity are increasing, and this framework contributes an important step towards improving academic and policy discussions around legal complexity and regulation