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The Effect of Security Market Regulations on Stock Returns

The Effect of Security Market Regulations on Stock Returns. Gary Santoni , PhD Ball State University. Recent Recessions. U.S. Economy in 2009. Securities Market Regulatory Acts. Securities Act of 1933 Securities Exchange Act of 1934 Public Utility Holding Company Act of 1935

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The Effect of Security Market Regulations on Stock Returns

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  1. The Effect of Security Market Regulations on Stock Returns Gary Santoni, PhD Ball State University

  2. Recent Recessions

  3. U.S. Economy in 2009

  4. Securities Market Regulatory Acts • Securities Act of 1933 • Securities Exchange Act of 1934 • Public Utility Holding Company Act of 1935 • Trust Indenture Act of 1939 • Investment Company Act of 1940 • Investment Advisors Act of 1940 • Securities Investor Protection Act of 1970 • Sarbanes-Oxley Act of 2002

  5. Frequencies of Amendments

  6. Purpose of the Regulation “Frequently the prices of securities on such exchanges (NYSE, etc.) and markets are susceptible to manipulation and control, and the dissemination of such prices gives rise to excessive speculation resulting in sudden and unreasonable fluctuation in the prices of securities...” Section 2, Securities Exchange Act of 1934

  7. S&P 500 Monthly Total Real Returns 8 1933 6 4 2 0 - 2 YEARS - 4 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 RETt-1, t = ((Pt + Dt-1, t – Pt-1)/Pt-1)1200

  8. S&P 500 Monthly Total Real Returns 8 1933 6 4 2 0 - 2 YEARS - 4 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 RETt-1, t = ((Pt + Dt-1, t – Pt-1)/Pt-1)1200

  9. S&P 500 40 32 24 20 16 12 8 4 Two Crashes: 1928-1934 and 2006-2009 1600 1400 0 1200 1000 800 600 2006 2007 2008 2009 2010 2011 2012 1928 1929 1930 1931 1932 1933 1934

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