Can Regulators Prevent Corporate Scandals? What 200 Years of History Tell Us

Are regulatory interventions in financial markets delayed reactions to market failures, or can regulators pre-empt corporate misbehavior? Given the high economic and social costs associated with corporate scandals, and the substantial resources countries dedicate to preventing such misconduct, the answer to this question is of utmost importance.

Anecdotal evidence suggests that regulatory activity has a strong reactive component. History offers several prominent examples: The British Joint Stock Companies Act of 1844 followed widespread business failures and bankruptcies, the U.S. Securities Act of 1933 and the Securities Exchange Act of 1934 are often seen as a reaction to the Great Depression … Read more

Making Sense of One Dollar CEO Salaries

In recent years, top executives taking a $1 base salary (or less) has become a high-profile phenomenon across many types of organizations. The Chief Executive Officers (CEOs) of some of the most recognizable corporations, both successful and distressed, have had a $1 salary (e.g., Google, AIG and General Motors). Regulators consider the practice important, as members of the Senate Banking Committee pressed the CEOs of the three U.S. automakers to accept a $1 salary during their bailout hearings (Wall Street Journal 2008). The precedent was set in 1978 by Lee Iacocca, the former Chairman and CEO of Chrysler, who … Read more