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Securities regulation, household equity ownership, and trust in the stock market

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Listed:
  • Hans B. Christensen

    (University of Chicago Booth School of Business)

  • Mark Maffett

    (University of Chicago Booth School of Business)

  • Lauren Vollon

    (University of Chicago Booth School of Business)

Abstract

Using aggregate data from national accounts, we study whether strengthening and harmonizing securities regulation across the European Union increases household equity ownership. We find a significant increase in the proportion of liquid assets invested in equity, both when a household’s own country adopts the regulation and when other countries adopt the regulation. To directly explore the mechanism through which households’ willingness to directly invest in the equity market increases, we show that the effect of securities regulation is stronger in countries where trust is low and between countries where cultural biases are most pronounced.

Suggested Citation

  • Hans B. Christensen & Mark Maffett & Lauren Vollon, 2019. "Securities regulation, household equity ownership, and trust in the stock market," Review of Accounting Studies, Springer, vol. 24(3), pages 824-859, September.
    • Handle: RePEc:spr:reaccs:v:24:y:2019:i:3:d:10.1007_s11142-019-09499-8
    DOI: 10.1007/s11142-019-09499-8
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    Cited by:

    1. Pietro Bonetti & Miguel Duro & Gaizka Ormazabal, 2020. "Disclosure Regulation and Corporate Acquisitions," Journal of Accounting Research, Wiley Blackwell, vol. 58(1), pages 55-103, March.
    2. Martin Kapons & Peter Kelly & Robert Stoumbos & Rafael Zambrana, 2023. "Dividends, trust, and firm value," Review of Accounting Studies, Springer, vol. 28(3), pages 1354-1387, September.
    3. John M. Barrios & Pietro A. Bianchi & Helena Isidro, 2020. "Random-Coefficients Logit Demand Estimation with Zero-Valued Market Shares," Working Papers 2020-20, Becker Friedman Institute for Research In Economics.
    4. John M. Barrios & Pietro A. Bianchi & Helena Isidro & Dhananjay Nanda, 2022. "Boards of a Feather: Homophily in Foreign Director Appointments Around the World," Journal of Accounting Research, Wiley Blackwell, vol. 60(4), pages 1293-1335, September.
    5. Raphael Duguay, 2022. "The Economic Consequences of Financial Audit Regulation in the Charitable Sector," Journal of Accounting Research, Wiley Blackwell, vol. 60(4), pages 1463-1498, September.

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    More about this item

    Keywords

    National accounts; Households; Equity ownership; Trust; Securities regulation;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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