On the Wealth Effects of the Supervisory Goodwill Controversy
Posted: 5 Nov 1998
We provide evidence on the potential wealth effects of the 1996 U.S. Supreme Court decision that the U.S. government had violated contractual obligations when, in 1989, it passed legislation prohibiting savings and loan associations from counting "supervisory goodwill" as capital. The Supreme Court decision did produce large wealth gains for the savings and loan plaintiffs, as did prior court decisions in favor of these savings and loans. However, little evidence exists to suggest negative market responses to important events surrounding the 1989 legislation.
JEL Classification: G28
Suggested Citation: Suggested Citation