Suchergebnisse

AbstractBankers argue that regulatory agencies require excessive capital adequacy. As a consequence, banks cannot achieve optimal capital structure. This study investigates the capital adequacy issue for bank holding companies over the 1974—1983 period, one of the most turbulent periods in recent banking history. During this time, capital is never excessive from the stockholders' viewpoint, and financial markets, on average, perceive capital levels as inadequate. Assuming the public wants no lower capital levels than shareholders, recent regulatory action to require higher capital ratios is a Pareto superior decision.

AbstractThis paper examines the stock market's response to the public utility rate‐case decisions, or settlements, in the context of the regulatory environment. Davidson (1984) finds that the market responds only to "surprise" settlements that are extreme. No adjustment is made, however, for the regulatory environment of the utility requesting a rate increase. The hypothesis of this paper is that a "surprise" is a function of the regulatory environment in which the decision is made. The results of the residual study support the hypotheses that after adjusting for regulatory environment, there is no significant market response to average settlements and above and below average settlements influence the market positively and negatively, respectively.