The Origins of the Blue Sky Laws: A Test of Competing Hypotheses

Mahoney, Paul G.

doi:10.2139/ssrn.296344

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The Origins of the Blue Sky Laws: A Test of Competing Hypotheses

UVA Law & Economics Research Paper No. 01-11

39 Pages Posted: 10 Jan 2002

See all articles by Paul G. Mahoney

Paul G. Mahoney

University of Virginia School of Law; European Corporate Governance Institute (ECGI)

Date Written: December 2001

Abstract

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.

Keywords: Blue sky laws, political choice, event history

JEL Classification: D78, G38, K22

Suggested Citation: Suggested Citation

Mahoney, Paul G., The Origins of the Blue Sky Laws: A Test of Competing Hypotheses (December 2001). UVA Law & Economics Research Paper No. 01-11, Available at SSRN: https://ssrn.com/abstract=296344 or http://dx.doi.org/10.2139/ssrn.296344