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Full-Text Articles in Securities Law
On Regulating Conflicts Of Interest In The Credit Rating Industry, Lin (Lynn) Bai
On Regulating Conflicts Of Interest In The Credit Rating Industry, Lin (Lynn) Bai
Faculty Articles and Other Publications
This paper discusses issues giving rise to conflict of interest concerns in the credit rating industry and examines whether and how those issues are addressed in the current regulation that builds on the guidelines of the Credit Rating Agency Reform Act of 2006, the SEC rules that were initially adopted in 2007 and recently amended in 2009, and the internal code of conducts of rating agencies. The examination leads to a conclusion that conflict of interest at the individual rating analyst level and some concerns of conflict of interest at the agency level have been largely addressed in the current …
The Performance Disclosures Of Credit Rating Agencies: Are They Effective Reputational Sanctions?, Lin (Lynn) Bai
The Performance Disclosures Of Credit Rating Agencies: Are They Effective Reputational Sanctions?, Lin (Lynn) Bai
Faculty Articles and Other Publications
The SEC has recently added new provisions to the credit rating agency regulation. These provisions require credit rating agencies to disclose publicly their rating actions and performance measurements. The new requirements seek to achieve two goals: (1) deter conflicts of interest in the credit rating industry by invoking the reputational sanction power of performance statistics, and (2) help new entrants to the industry build a track record so they can compete with established agencies. This paper reveals empirical evidence that the current disclosure requirements cannot achieve these goals and makes recommendations on how the regulation should be improved in light …
The Uptick Rule Of Short Sale Regulation: Can It Alleviate Downward Price Pressure From Negative Earnings Shocks?, Lin (Lynn) Bai
The Uptick Rule Of Short Sale Regulation: Can It Alleviate Downward Price Pressure From Negative Earnings Shocks?, Lin (Lynn) Bai
Faculty Articles and Other Publications
This paper empirically examines the effect of the uptick rule (including the bid test applicable to NASDAQ stocks) of short sale regulations on stock prices and short selling activities immediately after negative earnings surprises that occurred during the period of May to November 2005. It compares price paths and short selling activities of stocks restricted by the uptick rule with stocks that were exempted from the rule as a result of the SEC's Pilot Program. The study has not found any evidence that prices of stocks subject to the rule declined at a slower speed than prices of exempted stocks …