My friend and UCLAW colleague James Park's new book The Valuation Treadmill "traces the history of securities fraud regulation from the 1960s to the present to better understand the problem of public company securities fraud."
Jim makes "the novel argument that securities fraud emerged as a significant risk for public companies as investors changed how they valued stocks. As investors adopted modern valuation models and attempted to develop projections of a corporation’s ability to generate earnings into the future, it became more important for public companies to meet market expectations about their performance. Public corporations now have a structural incentive to issue misleading disclosure to create the appearance that their economic prospects are brighter than they really are."
He uses very interesting case studies involving Xerox, Penn Central, Apple, Enron, and GE.
Jim offers up a brief summary of his argument at the Harvard Forum. But you really need to buy the book.
