Monday, February 02, 2009

The Future of Securities Regulation by Luigi Zingales

Luigi Zingales has been in the news a bunch lately. He has testified to Congress, been on NPR, in Forbes, in The Economist, and the Wall Street Journal to name just a few (and these have all been since September!!!)

Which is to say when Luigi Zingales speaks (or writes) on the Future of Securities Regulation it makes sense to take note.

(On the paper that follows he only allows two paragraphs quotes so the review will be short, but by all means read the whole thing.)

SSRN-The Future of Securities Regulation by Luigi Zingales:
"....I propose a series of reforms that center around corporate governance, while shifting the focus from the protection of unsophisticated investors in the purchasing of new securities issues to the investment in mutual funds, pension funds, and other forms of asset management....three main areas of intervention.
  1. First, a reform of corporate governance aimed at empowering institutional investors to nominate their own directors to the board....a new Glass-Steagall Act, which...will separate mutual fund management from investment and commercial banking...
  2. The second goal should be the protection of unsophisticated individuals with regard to their investments. The minimum this protection entails is enhanced disclosure....
  3. The third goal should be that of reducing the regulatory gap between public markets and private markets. The recent trend of migration...suggests that this differential is excessive. This migration should be stopped not only by deregulating the public market, but also by introducing some disclosure standards in the private one."
(note the numbers (1,2,3) were added to help the reader and are not in the actual paper).

Good stuff! I highly recommended reading it all!

An I^3 Paper!(Interesting, Important, and Informative)

BTW: even if you are not interested in regulation, the figures at the back of the paper are excellent and could/should be included in many classes from Investments to Macroeconomics, Money and Banking, Financial Institutions, and even Corporate Finance.

Cite: Zingales, Luigi ,The Future of Securities Regulation(January 29, 2009). Chicago Booth School of Business Research Paper No. 08-27; FEEM Working Paper No. 7.2009. Available at SSRN:

The Copyright I guess is to Zingales himself, but I could not find it on the paper but he asked the copyright be mentioned. I would say it is his, but I will check and edit this when I know.

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