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Lobbying and One-Size-Fits-All Securities RegulationHenry L. FriedmanUniversity of California, Los Angeles (UCLA) - Accounting Area Mirko Stanislav HeinleUniversity of Pennsylvania - Accounting Department February 7, 2013 Abstract: Is securities regulation tailored to specific firms necessarily more efficient than regulation applied uniformly to all firms? We develop a model to compare individualized (IR) and one-size-fits-all (OS) regulation. In our model, two firms must raise capital from investors and can lobby the securities regulator, who is also subject to political pressure. We find that the OS regime is more welfare efficient than the IR regime due to less wasteful lobbying and more available funding. We also develop empirical predictions on how agency problems and product and capital market interactions between firms affect regulatory strength, lobbying, and costs of capital.
Number of Pages in PDF File: 43 Keywords: Securities, Regulation, Lobbying JEL Classification: D72, G38, L51, M48 working papers seriesDate posted: July 15, 2012 ; Last revised: February 12, 2013Suggested CitationContact Information
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