Conflicts of Interest and Market Discipline Among Financial Service Firms
By: WALTER, Ingo
.
Material type: 
ArticlePublisher: o : Elsevier, August 2004European Management Journal 22, 4, p. 361-376Abstract: Very recent reports on Maxwell Communications Corporation and Enron clearly underlineda single important weakness in the behavior of corporations and financial markets - the explotation of conflicts of interest. Although potential conflicts of interest are a fact of life among financial firms, they can only come to flower when competition is not perfect and when markets are not fully transparent. Since undrlying market imperfections are systematic even in highly developed financial systems, causing agency problems, it is essential that the problem of conflict-of-niterest exploitation is adressed discipline if public confidence in financial markets is not to be repetedly shaken. This paper explores conflicts of interest in wholesale and retail financial markets, andin financial firms. It reviews existing regulatory measures and rating agencies as well as internal controls, and recommends strengthening of measures to prevent conflict exploitation
Very recent reports on Maxwell Communications Corporation and Enron clearly underlineda single important weakness in the behavior of corporations and financial markets - the explotation of conflicts of interest. Although potential conflicts of interest are a fact of life among financial firms, they can only come to flower when competition is not perfect and when markets are not fully transparent. Since undrlying market imperfections are systematic even in highly developed financial systems, causing agency problems, it is essential that the problem of conflict-of-niterest exploitation is adressed discipline if public confidence in financial markets is not to be repetedly shaken. This paper explores conflicts of interest in wholesale and retail financial markets, andin financial firms. It reviews existing regulatory measures and rating agencies as well as internal controls, and recommends strengthening of measures to prevent conflict exploitation
Click on an image to view it in the image viewer
There are no comments for this item.