Jonas Heese has posted an interesting paper to SSRN, Government Preferences and SEC Enforcement, where he argues that the SEC goes easy on firms that contribute significantly to employment in a particular area.  He finds that the effect is magnified in presidential election years in swing states, and for firms that are headquartered in districts senior congresspersons who have SEC oversight responsibilities.  This effect cannot be explained by the hypothesis that labor-intensive firms simply have better accounting; according to Hesse, they actually have worse accounting than other comparable businesses (which may in fact reflect their knowledge that the SEC is less likely to target them).  He concludes, essentially, that the SEC is responding to political/voter pressures to take a hands-off approach to firms that are responsible for providing jobs.

One of the interesting points he makes is that this kind of pressure is independent of “special interest” lobbying; rather, this kind of pressure is a result of government actors responding to voter preferences.

The paper is available for download here.