I study whether industry employment of active regulators weakens oversight. To examine this question, I exploit that the Financial Reporting Enforcement Panel (FREP), the German capital-market regulator responsible for enforcing public firms’ compliance with accounting standards, allows its...

This study examines whether introduction of fixed-price regulation influences firms to increase the elasticity of their cost structures and to reduce the asymmetric behavior of cost in response to changes in volume. It also examines variations in the extent of such responses arising from...