The Origins of the Blue Sky Laws: A Test of Competing Hypotheses
Paul G. Mahoney
University of Virginia School of Law
UVA Law & Economics Research Paper No. 01-11
Between 1911 and 1931, 47 of the 48 states adopted state securities, or "blue sky," laws. This paper employs an event history analysis to analyze public interest, public choice, and ideological explanations for the enactment of blue sky laws. The data suggest that the decision to adopt a blue sky law was heavily influenced by the strength of progressive lobbies. However, the type of law adopted was more strongly influenced by the prevalence of small banks which faced competition for depositors' funds from securities salesmen. I also provide evidence that more stringent blue sky laws increased small bank profits.
Number of Pages in PDF File: 39
Keywords: Blue sky laws, political choice, event history
JEL Classification: D78, G38, K22
Date posted: January 10, 2002
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