I provide new tests of regulatory impact on informed trading in the stock market. After the implementation of Reg FD there is a significant decrease in the Hasbrouck [Hasbrouck, J., 1991a. The summary informativeness of stock trades: an econometric analysis. Review of Financial Studies 4, 571–595.] summary informativeness statistic, a measure of informed trading based on intra-daily trade level data. But, the switch to decimalization on the New York Stock Exchange has a much larger impact on this measure. These results highlight the difficulty in attributing specific effects to broad based regulatory events.

Using a sample of 102 spinoffs in the period 1981 to 1997, we investigate the relation between corporate governance and the spinoff decision. Diversified firms conducting a spinoff have characteristics previously hypothesized to be associated with more effective corporate governance, such as greater ownership by outside board members, more heterogeneous boards, and fewer board members, in comparison to a set of peer firms. Post spinoff, relative valuation measures increase a significantly greater extent than for peer firms. These findings are consistent with the view that agency problems are a contributing factor in firms maintaining value destroying diversification strategies.

In the US, open-market repurchases have a non-standard structure, lack formal procedures and there is low degree of transparency. Hence, in order to fully capture the signalling incentives of buy-backs in more general context, we examine the Australian environment where there a distinct announcement of, substantial information release during, as well as a transparent process throughout, the buy-back event. Our study finds strong incentives for on-market buy-backs related to: (i) signalling of undervaluation, (ii) signalling to reduce agency costs and/or information asymmetry, as well as (iii) a means to utilise excess debt capacity. Our most significant result is that signalling incentives, in the context of the more transparent Australian buy-back environment, are substantially greater relative to comparable existing US evidence. Accordingly, changing the US repurchase requirements to a format similar to that which now exists in Australia would encourage the release of more timely, relevant information and so improve the signalling incentives for, and consequently the power of, the US repurchase mechanism.

We examine Enron's collapse to provide insights as to the efficacy of recent governance reforms. In doing so, we explore two main issues. First, if recently mandated governance changes had been in place earlier, would they have constrained actions by Enron's management? Second, and more generally, which of the recent governance changes might act to constrain governance failures going forward? Although many aspects of corporate governance failed at Enron, the firm's viability ultimately rested on an inherently risky business strategy, a strategy that the board and others apparently failed to understand. However, it is not apparent that increasing board independence would have changed Enron's strategic direction, or prevented the firm's collapse. From this perspective, many recent reforms, including those mandating specific board structures likely move firms away from their optimal governance structure and are tantamount to closing the stable door after the horse has bolted. We assert that, ceteris paribus, stronger internal controls coupled with reduced potential for conflicts of interest on the part of the external auditor might have constrained management's ability to hide the firm's true financial condition and are likely to constrain aspects of fraudulent behavior going forward.