Unlike many other areas of regulation, financial regulation operates in the context of a complex interdependent system. The interconnections among firms, markets, and legal rules have implications for financial regulatory policy, especially the choice between ex ante regulation aimed at...

The global financial crisis demonstrated the inability and unwillingness of financial market participants to safeguard the stability of the financial system. It also highlighted the enormous direct and indirect costs of addressing systemic crises after they have occurred, as opposed to...

A supply-and-demand model of deregulated financial markets is compared to deposit-multiplier models, interest-rate reduced forms, the textbook IS-LM model, and a credit-market approach. This model is used to analyze a variety of financial events that simpler models find paradoxical: some events...

Merger and Acquisition (M&A) transactions create the potential for self-interested behavior by the boards of directors of acquired, or target, corporations because target boards may have self-interested reasons for preferring one acquirer over any other. The preferred acquirer may, for example,...

In a management buyout (MBO), the managers of a company typically partner with a financing source, such as a private equity firm, to acquire the firm that employs them. MBOs raise an important corporate governance concern not present in other corporate acquisitions: managers act as fiduciaries...

Corporate law and scholarship generally assume that public corporations are controlled by professional managers, while shareholders play only a weak and passive role. As a result, corporate officers and directors are understood to be subject to extensive fiduciary duties, while shareholders...

After only a brief hiatus in the wake of the stock market downturn of 2000, Chief Executive Officer (CEO) pay levels have resumed their upward trajectory. In response, many influential shareholders and academics are asking the question: Are the executive compensation arrangements we observe...