Abstract

http://ssrn.com/abstract=2348968
 
 

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The Revolving Door for Financial Regulators


Sophie Shive


University of Notre Dame - Department of Finance

Margaret Forster


University of Notre Dame

September 23, 2014


Abstract:     
We find that the practice among public financial firms of hiring former employees of one of six U.S. regulatory agencies increased 18-55% from 2001 to 2013. A firm is twice as likely to hire an ex-regulator from an agency that regulates the firm, and average hiring announcement returns are positive, especially for board members and top executives. Following a revolving door hire from an agency that regulates the firm, stock return volatility and downside risk decrease and leverage ratios and asset quality improve. These results are absent for other executive hires, and are consistent with ex-regulators contributing to decrease risk at financial firms.

Number of Pages in PDF File: 59

Keywords: revolving door, regulation

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Date posted: November 9, 2013 ; Last revised: September 24, 2014

Suggested Citation

Shive, Sophie and Forster, Margaret, The Revolving Door for Financial Regulators (September 23, 2014). Available at SSRN: http://ssrn.com/abstract=2348968 or http://dx.doi.org/10.2139/ssrn.2348968

Contact Information

Sophie Shive (Contact Author)
University of Notre Dame - Department of Finance ( email )
P.O. Box 399
Notre Dame, IN 46556-0399
United States
Margaret Forster
University of Notre Dame ( email )
Notre Dame, IN 46556-5646
United States
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