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The Origins of the Blue-Sky Laws: A Test of Competing Hypotheses

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  • Mahoney, Paul G

Abstract

Between 1911 and 1931, 47 of the 48 states adopted state securities, or "blue-sky," laws. This paper employs an event history analysis to analyze public interest, public choice, and ideological explanations for the enactment of blue-sky laws. The data suggest that the decision to adopt a blue-sky law was heavily influenced by the strength of progressive lobbies. However, the type of law adopted was more strongly influenced by the prevalence of small banks that faced competition for depositors' funds from securities salesmen. I also provide evidence that more stringent blue-sky laws increased small-bank profits.

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  • Mahoney, Paul G, 2003. "The Origins of the Blue-Sky Laws: A Test of Competing Hypotheses," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 229-251, April.
    • Handle: RePEc:ucp:jlawec:y:2003:v:46:i:1:p:229-51
    DOI: 10.1086/345580
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    References listed on IDEAS

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    Cited by:

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    3. Eric Hilt, 2014. "History of American Corporate Governance: Law, Institutions, and Politics," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 1-21, December.
    4. Smythe Donald J., 2008. "Transaction Costs, Neighborhood Effects, and the Diffusion of the Uniform Sales Act, 1906-47," Review of Law & Economics, De Gruyter, vol. 4(1), pages 341-372, October.
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    7. Carruthers, Bruce G. & Guinnane, Timothy W. & Lee, Yoonseok, 2009. "Bringing "Honest Capital" to Poor Borrowers: The Passage of the Uniform Small Loan Law, 1907-1930," Center Discussion Papers 50949, Yale University, Economic Growth Center.
    8. Agrawal, Ashwini K., 2013. "The impact of investor protection law on corporate policy and performance: Evidence from the blue sky laws," Journal of Financial Economics, Elsevier, vol. 107(2), pages 417-435.
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