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Fiduciary Duty and the Market for Financial Advice

Bhattacharya, Vivek - 2019

Fiduciary duty aims to solve principal-agent problems, and the United States is in the middle of a protracted debate … state-level variation in common law fiduciary duty, we find that it raises risk-adjusted returns by 25 bp. Through the lens …, and counterfactual simulations suggest that further increases in the stringency of fiduciary duty, such as a federal …

Persistent link: https://www.econbiz.de/10012870060

How Important are Perpetual Tax Savings?

Hines Jr., James R. - 2012

Federal estate taxes give very wealthy families incentives to transfer resources directly to distant generations in order to avoid taxes on successive rounds of transfers. Until recently such transfers were impeded by the rule against perpetuities, which prevented transfers to most potential...

Persistent link: https://www.econbiz.de/10013097667

Economic Effects of Runs on Early 'Shadow Banks' : Trust Companies and the Impact of the Panic of 1907

Frydman, Carola - 2012

We use the unique circumstances that led to the Panic of 1907 to analyze its impact on economic activity. The panic was fuelled by runs on the 'shadow banks' of the time, New York's trust companies. But the shock that triggered the runs was unrelated to the nonfinancial corporations affiliated...

Persistent link: https://www.econbiz.de/10013103045

Conflicting Interests and the Effect of Fiduciary Duty — Evidence from Variable Annuities

Egan, Mark L.; Ge, Shan; Tang, Johnny - 2022

conflicts of interest, the Department of Labor proposed a rule in 2016 that would hold brokers to a fiduciary standard when … dealing with retirement accounts. We find that after the proposed fiduciary rule, sales of high-expense variable annuities …-expense products. Based on our structural model estimates, investor welfare improved as a result of the fiduciary rule under …

Persistent link: https://www.econbiz.de/10014238702

Ex Ante Carrots Instead of Ex Post Sticks : Two Examples

Aizenman, Joshua - 2021

This paper argues that the limited ability to help developing countries in a crisis should shift the focus to policies helping in reducing the ex ante probability of crises. Indirectly, such policies would also alleviate the depths of realized crises. Two specific ideas are explored: I....

Persistent link: https://www.econbiz.de/10013212371

The Social Value of Financial Expertise

Kurlat, Pablo D. - 2016

I study expertise acquisition in a model of trading under asymmetric information. I propose and implement a method to estimate the ratio of social to private marginal value of expertise. This can be decomposed into three sufficient statistics: traders' average profits, the fraction of bad assets...

Persistent link: https://www.econbiz.de/10012997881

Peer Advice on Financial Decisions : A Case of the Blind Leading the Blind?

Ambuehl, Sandro - 2018

Previous research shows that many people seek financial advice from non-experts, and that peer interactions influence financial decisions. We investigate whether such influences are beneficial, harmful, or simply haphazard. In our laboratory experiment, face-to-face communication with a randomly...

Persistent link: https://www.econbiz.de/10012911100

The Market for Financial Advice : An Audit Study

Mullainathan, Sendhil - 2012

Do financial advisers undo or reinforce the behavioral biases and misconceptions of their clients? We use an audit methodology where trained auditors meet with financial advisers and present different types of portfolios. These portfolios reflect either biases that are in line with the financial...

Persistent link: https://www.econbiz.de/10013108602

Legal Protection in Retail Financial Markets

Carlin, Bruce Ian - 2009

Given the importance of sound advice in retail financial markets and the fact that financial institutions outsource their advice services, what legal rules maximize social welfare in the market? We address this question by posing a theoretical model of retail markets in which a firm and a broker...

Persistent link: https://www.econbiz.de/10013159528

When are Analyst Recommendation Changes Influential?

Loh, Roger - 2009

Not all stock recommendation changes are equal. In a sample constructed to minimize the impact of confounding news, relatively few analyst recommendation changes are influential in the sense that they impact investors' beliefs about a firm in a way that could be noticed in that firm's stock...

Persistent link: https://www.econbiz.de/10013159733