We thank the two anonymous referees for their helpful comments. The suggestions resulted in a significantly improved paper.
Deregulation and Risk
Article first published online: 23 JUN 2011
© 2011 Financial Management Association International
Volume 40, Issue 2, pages 295–329, Summer 2011
How to Cite
Semaan, E. and Drake, P. P. (2011), Deregulation and Risk. Financial Management, 40: 295–329. doi: 10.1111/j.1755-053X.2011.01143.x
- Issue published online: 23 JUN 2011
- Article first published online: 23 JUN 2011
The recent market turmoil has brought attention to how deregulation of the financial sector may affect risk. The purpose of our study is to examine the market's perception of risk associated with deregulation. We accomplish this by decomposing security risk around deregulation into systematic and unsystematic risk. We examine deregulation of several industries and find a consistent pattern of risk adjustment to deregulation, whereby the increase in security risk is temporary and largely unsystematic.