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Speech
Too big to fail: expectations and impact of extraordinary government intervention and the role of systemic risk in the financial crisis
Testimony before the Financial Crisis Inquiry Commission, Washington, D.C.
Journal Article
Auditing the auditors: oversight or overkill?
A growing number of high-profile companies have had to restate their earnings at substantially lower levels to correct the prior use of "aggressive" and even fraudulent accounting practices. Because the companies auditors approved the original reports, policymakers have questioned the capacity of public accounting firms to promote fair financial reporting. In response, recent legislation has instituted several reforms, including the creation of the Public Company Accounting Oversight Board, which together with the Securities and Exchange Commission will investigate alleged lapses in ...
Journal Article
The insider trading debate
Securities trading has generated some of the most sensational scandals in the popular business press. In one of the most publicized cases of insider trading, in the late 1980s Michael R. Milken and Ivan F. Boesky were sentenced to stiff prison terms and payment of enormous damage assessments and punitive penalties. However, at least among economists and legal scholars, insider trading remains a controversial economic transaction. A substantial body of academic and legal scholarship questions whether insider trading is even harmful, much less worthy of legal actions. ; The authors of this ...
Discussion Paper
Money Market Funds and the New SEC Regulation
On October 14, 2016, amendments to Securities and Exchange Commission (SEC) rule 2a-7, which governs money market mutual funds (MMFs), went into effect. The changes are designed to reduce MMFs? susceptibility to destabilizing runs and contain two principal requirements. First, institutional prime and muni funds?but not retail or government funds?must now compute their net asset values (NAVs) using market-based factors, thereby abandoning the fixed NAV that had been a hallmark of the MMF industry. Second, all prime and muni funds must adopt a system of gates and fees on redemptions, which can ...
Conference Paper
Early intervention in the securities industry
Journal Article
Fighting Fund Runs
Journal Article
Debate continues over the harm of insider trading
Report
Stock market reaction to financial statement certification by bank holding company CEOs
In 2002, the Securities and Exchange Commission mandated that the chief executive officers of large, publicly traded firms certify the accuracy of their company financial statements. In this paper, I investigate whether CEO certification has had a measurable effect on the stock market valuation of the forty-two bank holding companies subject to the SEC order. I find that these firms experienced a positive average abnormal return of 30 to 60 basis points on the day of certification-a result driven primarily by those BHCs that certified ahead of the SEC's deadline. Characteristics associated ...
Journal Article
Interview with Arthur Levitt