Investor Choice in Global Markets for Securities

In a recent paper, we explore how globalization has affected the operation of securities markets and the challenges this poses for their regulation. The paper is part of the first phase of the New Special Study of the Securities Markets Project.

Securities markets have experienced unprecedented levels of cross-border activity over the past 30 years. Three secular trends have contributed to this phenomenon of globalization. First, liberalization: the removal of national foreign exchange controls and barriers to trade and investment. Second, the growth of collective investment, encouraged by favorable tax treatment of retirement saving. This has fostered a shift … Read more

The Promise and Perils of Crowdfunding

In the last few years, a source of financing for start-ups, known as crowdfunding, has become widely available. It involves raising capital from a large number of individuals, each of whom typically contributes a small sum. The internet has lowered the costs of crowdfunding by facilitating the dissemination of information about small projects, and its use has grown exponentially, with some $34 billion being raised worldwide through crowdfunding in 2015 alone.

While the availability of crowdfunding is clearly good news for entrepreneurs, its merits for those providing the funding are less certain. Because funders typically put only small sums into … Read more

Stock Market Prices and the Market for Corporate Control

Stock market prices and the market for corporate control are both crucial elements of the corporate governance matrix within which public companies operate. Share prices constitute highly visible signals of investor perceptions of corporate performance that provide cues for governance responses by directors, managers and shareholders. If not neutered by defensive tactics, the market for corporate control can be a potent corrective mechanism in circumstances where the incumbent management team is failing to create shareholder value, with potential acquirers seeking to obtain control on the assumption they can improve matters. Share prices in turn play an important role in the … Read more