References (13)



The Revolving Door for Financial Regulators

Sophie Shive

University of Notre Dame - Department of Finance

Margaret Forster

University of Notre Dame

July 21, 2014

We examine financial firms’ practice of hiring people with work experience at one of six U.S. financial regulators, and find that revolving door employee presence increases 18-55% from 2001 to 2013. Regulated firms, especially those anticipating enforcement action, are more than twice as likely to hire ex-regulators as are other financial firms. Average hiring announcement returns are positive, especially for board members and the top 3 positions at the firm. In the 1-4 quarters following a revolving door hire from an agency that regulates the firm, firms’ stock return volatility and downside risk decrease and leverage ratios and asset quality improve. Our results are consistent with ex-regulators initiating or facilitating policies of decreased risk at financial firms.

Number of Pages in PDF File: 53

Keywords: revolving door, regulation

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Date posted: November 9, 2013 ; Last revised: July 22, 2014

Suggested Citation

Shive, Sophie and Forster, Margaret, The Revolving Door for Financial Regulators (July 21, 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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References:  13

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