The Revolving Door for Financial Regulators
University of Notre Dame - Department of Finance
University of Notre Dame
November 18, 2015
We investigate the drivers and effects of financial firms' hiring of former U.S. financial regulatory employees from 2001-2014. The number of top executives with regulatory experience per firm has increased 33% during 2001-2014, and hiring is associated with positive average announcement returns and a salary premium. In the quarter after hire, market and balance sheet measures of firm risk decrease significantly. The absence of this result for unregulated firms and for exogenous shocks to regulatory experience suggest that firms hire ex-employees of their regulators when they need to reduce risk, consistent with a schooling hypothesis.
Number of Pages in PDF File: 55
Keywords: revolving door, regulation
Date posted: November 9, 2013 ; Last revised: November 19, 2015
© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo8 in 0.359 seconds