Economic Foundations of Stock Market Regulation

  • Irwin Friend


Before considering the economic impact of stock regulation in the United States, which has pioneered in this area, it is desirable to review briefly the general purposes of such regulation. The two basic aims of the original legislation — the Securities Act of 1933 and the Securities and Exchange Act of 1934 — were protection of investors and promotion of the broader public interest as this interest is affected by trading in securities. The first aim has a fairness orientation and the second an economic orientation, since the public interest in the area of securities regulation relates largely to the impact of regulation on the economic performance of securities markets.


Market Efficiency Security Market Security Regulation Full Disclosure Outstanding Issue 
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  1. 1.
    Part of this discussion is based on Irwin Friend, ‘The Economic Consequences of the Stock Market’, American Economic Review (May 1972).Google Scholar
  2. 7.
    Part of this discussion is based on Irwin Friend, ‘The S.E.C. and the Economic Performance of Securities Markets’, in Henry G. Manne (ed.), Economic Policy and the Regulation of Corporate Securities ( Washington, D.C.: American Institute for Public Policy Research, 1969 ).Google Scholar
  3. 17.
    Roger G. Ibbotson, ‘Price Performance of Common Stock New Issues’ (University of Chicago, 1973).Google Scholar
  4. 18.
    Irwin Friend and Randolph Westerfield, ‘Required Disclosure and the Stock Market: Comment’, American Economic Review (June 1974).Google Scholar
  5. 29.
    Merton H. Miller and Myron Scholes, ‘Rates of Return in Relation to Risk: A Re-examination of Some Recent Findings’, in M. C. Jensen (ed.) Studies in the Theory of Capital Markets (New York: Praeger, 1971).Google Scholar
  6. 35.
    George W. Douglas, ‘Risk in the Equity Markets: An Empirical Appraisal of Market Efficiency’, Yale Economic Essays (Spring 1969).Google Scholar

Copyright information

© Michael Allingham and M. L. Burstein 1976

Authors and Affiliations

  • Irwin Friend

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