On the Wealth Effects of the Supervisory Goodwill Controversy

Posted: 5 Nov 1998

See all articles by Donald R. Fraser

Donald R. Fraser

Texas A&M University - Department of Finance

Leonard Bierman

Texas A&M University - Department of Management

Asghar Zardkoohi

Texas A&M University - Department of Management

Abstract

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

Fraser, Donald R. and Bierman, Leonard and Zardkoohi, Asghar, On the Wealth Effects of the Supervisory Goodwill Controversy. Available at SSRN: https://ssrn.com/abstract=137432

Donald R. Fraser (Contact Author)

Texas A&M University - Department of Finance ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-845- 2020 (Phone)

Leonard Bierman

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Asghar Zardkoohi

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States
919-845-2043 (Phone)
919-845-9641 (Fax)

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