By: Justin Ewers

August 20, 2006, U.S. News and World Report

An excerpt from the article:

Regulation for Fun and Profit

Can securities regulations actually make businesses more efficient? After examining the last big regulatory push before the Sarbanes-Oxley corporate reform law-the 1964 amendments to the FDR-era securities acts-three professors from MIT, Stanford, and Northwestern say yes. Their paper, Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments, which appeared in the Quarterly Journal of Economics, studies the performance of companies in the 34 months between the legislation's proposal and its implementation. As businesses began meeting stricter disclosure requirements, their stock climbed 11.5 percent to 22.1 percent more than that of businesses unaffected by the law, making as much as $6.2 billion for shareholders. Those firms also enjoyed higher income and sales growth. "We're not arguing that all regulation is good by any means," says Stanford's Paul Oyer, a coauthor. But sometimes the market does seem to like it.

Co-authors include: Michael Greenstone (Sloan School of Management, MIT) and Annette Vissing-Jorgensen (Kellogg School of Management, Northwestern)