ANN ARBOR — During the darkest days for investors after the 2008 financial crisis that swallowed Lehman Brothers up like a sinkhole, the common wisdom was to hold tumbling shares and wait for better days. (more…)
EAST LANSING, Mich. — The stock market should be regulated only during times of extraordinary financial disruptions when speculators can destroy healthy businesses, according to a new study led by a Michigan State University scholar.
The study, in the Journal of Financial Economics, is one of the first to suggest when the U.S. Securities and Exchange Commission should get involved in the market.
The answer: rarely. The SEC should step in only when outside financial disruptions make it impossible for large shareholders to fend off “short sellers” – or speculators betting a company’s stock value will decrease, said Naveen Khanna, finance professor in MSU’s Broad College of Business. (more…)
The prevailing narrative of the financial crisis revolves around banks’ reduced ability to issue loans, but a new paper by University of Arizona associate professor of finance Kathy Kahle reveals that the credit supply shock did not affect publicly traded firms as much as expected.
Bank losses from toxic assets were responsible for the credit contraction, but those toxic assets – mostly mortgage-backed securities – are not directly related to the performance of industrial firms. (more…)
