Under the New Basel Accord bank capital adequacy rules (Pillar 1) are substantially revised but the introduction of two new quot;Pillarsquot; is, perhaps, of even greater significance. This paper focuses on Pillar 2 which expands the range of instruments available to the regulator when...

Motivated by existing evidence of a preference among investors for assets with lottery-like payoffs and that many investors are poorly diversified, we investigate the significance of extreme positive returns in the cross-sectional pricing of stocks. Portfolio-level analyses and firm-level...