Regulation and Scholarship: Constant Companions or Occasional Bedfellows?

Abstract

Capital market regulators often, but not always, are driven to launch their most important new regulatory initiatives by scholarly findings in the fields of finance and law and economics. Sometimes exciting and original social science scholarship that relates to the law and regulation of capital markets profoundly influences regulation; sometimes such scholarship is ignored completely. This brief contribution to the Yale Journal on Regulation is based on a speech given at the Journal's twenty-fifth anniversary celebration on April 25, 2008, and is a prelude to a full article on the same topic that will be published in the Winter 2009 issue of the Journal. In both of these contributions I adduce evidence to support the hypothesis that the truth and intellectual strength of the work does not seem to be the key driver that determines influence. Rather, political expediency appears to be the determinative factor. This piece presents a summary of a few of the major arguments in the forthcoming article.