When No Law is Better Than a Good Law

Utpal Bhattacharya () and Hazem Daouk

Review of Finance, 2009, vol. 13, issue 4, 577-627

Abstract: This paper argues, both theoretically and empirically, that sometimes no securities law may be better than a good securities law that is not enforced. The first part of the paper formalizes the sufficient conditions under which this happens for any law. The second part of the paper shows that a specific securities law -- the law prohibiting insider trading -- may satisfy these conditions. The third part of the paper takes this prediction to the data. We find that the cost of equity actually rises when some countries enact an insider trading law, but do not enforce it. Copyright 2009, Oxford University Press.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (40)

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfp011 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: When No Law is Better than a Good Law (2009)
Working Paper: When No Law is Better than a Good Law (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:13:y:2009:i:4:p:577-627

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Review of Finance is currently edited by Marcin Kacperczyk

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().