Higher Learning - Checks and Balances: The Economics of Corporate Governance Reform

In 2001 and 2002, financial reporting scandals at major publicly-traded U.S. corporations such as Enron and WorldCom fueled demand for wide-ranging corporate governance reforms. The changes proposed by public and private regulators have aimed to restore investor confidence, enhance management accountability, and improve shareholder value. Recent research evaluates the economic principles behind the government's response.

In his recent study, "Economics of Corporate Governance Reform," University of Chicago Graduate School of Business professor Randall S. Krosnzer notes that the reforms initiated by the Bush administration in 2002 are among the most far-reaching reforms to federal laws and regulations since the establishment of the Securities and Exchange Commission (SEC) in 1934.

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