The effect of enforcement on timely loss recognition: Evidence from insider trading laws

► I use first-time enforcement of insider trading laws across 16 countries as a shock to enforcement of securities laws and find a strong increase in timely loss recognition (TLR). ► Post-enforcement increases are not driven by alternative explanations such as IFRS adoption, financial market liberalization or changes in other macroeconomic factors. ► In addition to documenting how shocks to enforcement influence financial reporting outcomes, my study extends the Khan and Watts (2009) measure of accounting conservatism to a cross-country setting.