貨幣金融學（第十三版）課件 英文 -web4 Conflicts of Interest in the Financial Industry

TheEconomicsofMoney,Banking,andFinancialMarketsThirteenthEditionWebChapter4ConflictsofInterestintheFinancialIndustryCopyright?2022,2019,2016PearsonEducation,Inc.AllRightsReservedPreviewThischapterexplainswhatconflictsofinterestare,whyweshouldcareaboutthem,andwhytheyraiseethicalissues.Itthensurveysthedifferenttypesofconflictsofinterestthatoccurinthefinancialindustryandpresentspoliciestoremedythem.LearningObjectives(1of2)W4.1Explaintherelationshipbetweeneconomiesofscopeandconflictsofinterestinthefinancialindustry.W4.2Identifythewaysinwhichconflictsofinterestcancreateethicaldilemmasinfinancialservicesfirms.W4.3Identifythefourareasoffinancialservicesmostpronetoconflictsofinterestandexplainwhytheyaresosusceptible.LearningObjectives(2of2)W4.4Summarizehowandwhymarketsmayself-regulateandlimitconflictsofself-interest.W4.5Summarizethekeyfeaturesofthethreepoliciesenactedtolimitconflictsofinterestinfinancialmarkets.W4.6Listandsummarizethefiveapproachesusedtoremedyconflictsofinterestinfinancialmarkets.WhatAreConflictsofInterestandWhyAreTheyImportant?(1of3)TypeofmoralhazardproblemthatoccurswhenapersonorinstitutionhasmultipleobjectivesandasaresulthasconflictsbetweenthemMightberesponsibleforPreviousscandals(Enron)Subprimefinancialcrisisof2007–2008WhatAreConflictsofInterestandWhyAreTheyImportant?(2of3)EconomiesofscalerealizedfromcostadvantagesinthecollectionanduseofinformationEconomiesofscoperealizedbyprovidingmultiplefinancialservicestocustomersWhatAreConflictsofInterestandWhyAreTheyImportant?(3of3)Focusonconflictsofinterestthatarisewhenfinancialservicefirmsortheiremployeesserveoneinterestattheexpenseofanother’s,whichcouldbetheirowninterest,ratherthantheircustomer’s,orafirm’sinterestwhowantstosellsecuritiesratherthaninvestors’whoarepurchasersofthesecurities.Asaresult,theymightmisuseinformation,providefalseinformation,orconcealinformation.WhyDoWeCareAboutConflictsofInterest?Conflictsofinterestcansubstantiallyreducethequalityofinformationinfinancialmarketsincreasingasymmetricinformationproblems.Asymmetricinformationpreventsfinancialmarketsfromchannelingfundsintoproductiveinvestmentopportunitiesandcausesfinancialmarketsandeconomiestobelessefficient.TypesofConflictsofInterestUnderwritingandresearchininvestmentbankingAuditingandconsultinginaccountingfirmsCreditassessmentandconsultingincredit-ratingagenciesUniversalbankingUnderwritingandResearchinInvestmentBankingIssuersbenefitfromoptimisticresearchInvestorsdesireunbiasedresearchStrongincentivetoalterinformationprovidedtobothtypesofclients,favoringtheissuingfirmSpinningAuditingandConsultinginAccountingFirmsAccountingfirmsprovideitsclientswithconsultingservices(taxes,businessstrategies)PressurefromclientsthreateningtotakebusinesstoanotherfirmReluctancetocriticizeworkdonebynonauditcounterpartsProvideanoverlyfavorableauditinanefforttosolicitorretainauditbusinessArthurAndersonCreditAssessmentandConsultinginCredit-RatingAgenciesIssuerspaytoreceiveacreditratingInvestorsandregulatorsdependonwell-researchedimpartialassessmentsCredit-ratingagenciesmayalsoprovideconsultingservicesAuditingtheirownworkFavorableratingtoattractnewclientsTheCollapseofArthurAndersen

(1of2)In19

13,ArthurAndersen,ayoungaccountantwhohaddenouncedtheslipshodanddeceptivepracticesthatenabledcompaniestofooltheinvestingpublic,foundedhisownfirm.In2000,thebusinesswassplitintotwocomponentparts:ArthurAndersen(theauditingservice)andAndersenConsulting.TheCollapseofArthurAndersen

(2of2)Thecombinationofintensepressuretogeneraterevenueandprofitsfromauditingandthefactthatcertainclientsdominatedthebusinessofregionalofficestranslatedintotremendousincentivesforregionalofficemanagerstoprovidefavorableauditsfortheselargeclients.TheHoustonofficeofArthurAndersen,forexample,ignoredmanydiscrepanciesinEnron’sreporting.ArthurAndersenwasindictedinMarch2002andthenconvictedinJune2002ofobstructionofjusticeforimpedingtheS

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C’sinvestigationoftheEnroncollapse.ThisconvictionwasoverturnedbytheSupremeCourtinMay2005.UniversalBankingUnderwritingdepartment:aggressivesalesvs.unbiasedinvestmentadviceforcustomers.LimitlossesbysellingtocustomersortotrustaccountsEncourageunderwritingtopushsecuritiesfromfirmswithincreasingriskMakesloanswithoverlyfavorabletermstoearnfeesforotheractivitiesInfluenceorcoerceaborrowingorinvestingcustomertobuyinsuranceproductsF

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I:Banksters

(1of2)ThePecorahearingsthatfollowedontheheelsoftheGreatCrashof1929revealednumerouscasesofsevereexploitationofconflictsofinterestinthebankingindustry.AnaffiliateofNationalCityBank(theprecursortoCitibank)wasaccused,forexample,ofselling“unsoundandspeculativesecurities.”Bankerscametobereferredtoas“banksters,”apejorativeplayontheword‘gangsters’.F

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(2of2)TheresultingscandalsledtopassageoftheGlass-SteagallActin1933,whicheliminatedthepossibilityoftheseconflictsofinterestbymandatingcompleteseparationofcommercialbankingfrominvestmentbankingactivities.Itwasnotuntil1999thatthisactwasrepealedbyCongresstoenablebankstobecomemorecompetitive.CantheMarketLimitExploitationofConflictsofInterest?

(1of2)Incentivestoexploitconflictsofinterestmaynotbeveryhighandthereforethismightnotbeaproblem.Exploitingconflictsofinterestmighthurtafinancialfirm’sreputationEmpiricalevidencesuggeststhatCreditratingfirmsdonotoverratebondsofitscustomers.Marketsadjustwhenapotentialforconflictsofinterestarises(securitiesunderwritingbycommercialandinvestmentbanks).CantheMarketLimitExploitationofConflictsofInterest?

(2of2)Intheshortrun,exploitationispossibleandcanleadtolargegains.Motives:PoorlydesignedcompensationplansTemporaryrewardsIndividualsmightbeabletocapturereputationalrents.WhatHasBeenDonetoRemedyConflictsofInterest?(1of2)Sarbanes-OxleyActof2002IncreasedsupervisoryoversighttomonitorandpreventconflictsofinterestDirectlyreducedconflictsofinterestProvidedincentivesforinvestmentbankstonotexploitconflictsofinterestHadmeasurestoimprovethequalityofinformationinfinancialmarketsWhatHasBeenDonetoRemedyConflictsofInterest?(2of2)GlobalLegalSettlementof2002:RequiredinvestmentbankstoseverthelinksbetweenresearchandsecuritiesunderwritingBannedspinningImposed$1.4billionoffinesonaccusedinvestmentbanksRequiredinvestmentbankstomakepublictheiranalysts’recommendationsRequiredinvestmentbankstocontractforafive-yearperiodwithnofewerthanthreeindependentresearchfirmsthatwouldprovideresearchtotheirbrokeragecustomersWhatHasBeenDone?Dodd-FrankWallStreetReformandConsumerProtectionActof2010:CreatedanOfficeofCreditRatingsattheS

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Cwithitsownstaffandtheauthoritytofinecredit-ratingagenciesandtoderegisteranagencyifitproducesbadratings.Forcedcredit-ratingagenciestoprovidereportstotheS

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Cwhentheiremployeesgotoworkforacompanythathasbeenratedbytheminthelasttwelvemonths.Prohibitedcomplianceofficersfrombeinginvolvedinproducingorsellingcreditratings.RequiredtheS

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Ctopreventissuersofasset-backedsecuritiesfromchoosingthecredit-ratingagenciesthatwillgivethemthehighestratingandsupportedearlierinitiativesbytheS

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Ctolimitconflictsofinterest.Authorizedinvestorstobringlawsuitsagainstcredit-ratingagenciesforarecklessfailuretogetaccurateinformation.AFrameworkforEvaluatingPoliciestoRemedyConflictsofInterestTheexistenceofaconflictofinterestdoesnotmeanthatitwillhaveseriousadverseconsequencesDoesthemarkethaveadequateinformationandincentivestocontrolconflictsofinterest?Evenifincentivestoexploitconflictsofinterestremainstrong,eliminatingtheeconomiesofscopethatcreatetheconflictsofinterestmaybeharmfulbecauseitwillreducetheflowofreliableinformationApproachestoRemedyingConflictsofInterest(1of2)LeaveittothemarketPenalizethefinancialservicefirmPromotenewinstitutionalmeansRegulatefortransparencyMandatoryinformationdisclosureMightbetoocostlyforfinancialservicefirmsApproachestoRemedyingConflictsofInterest(2of2)SupervisoryoversightAppropriateinternalcontrolsSeparationoffunctionsAgentsshouldnotbeplacedinthepositiontorespondtomultipleprincipalsSocializationofinformationproductionInformationislikelytobeundersuppliediflefttoprivateprovision.EvaluatingSarbanes-Oxley,theGlobalLegalSettlement,andtheDodd-FrankBill(1of3)Policiesregulatingconflictsofinterestcanhelpincreasetheamountofinformationavailableinfinancialmarkets.Sarbanes-OxleydidexactlythiswhenitrequiredtheC

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Oofafirmtocertifytheperiodicfinancialstatementsanddisclosuresofthefirm.ThecostsofcomplyingwiththenewregulationsimposedbySarbanes-Oxley,however,werenotcheap.EvaluatingSarbanes-Oxley,theGlobalLegalSettlement,andtheDodd-FrankBill(2of3)Themarketisoftenabletoconstrainconflictsofinterestwhenithassufficientinformationwithwhichtodoso.TheGlobalLegalSettlementincludedaprovisionthatrequiredinvestmentbankingfirmstomaketheiranalysts’recommendationspublic.Thispolicyhelpedthemarketassesswhethertheanalystswereacting