School
of
Accounting
and
Finance
professor’s
research
receives
international
recognition
by
Patty
Mah
The
Journal
of
Investment
Management
(JOIM)
has
recognized
co-authored
research
by
University
of
Southern
California
Professor
Lawrence
E.
Harris,
University
of
California
-
Berkeley
Professor
Ethan
Namvar,
and
University
of
Waterloo
Professor
Blake
Phillips
with
their
2013
Special
Distinction
Award.
Candidates
for
this
annual
award
are
selected
from
among
published
work
in
the
Journal
within
a
calendar
year.
The
final
selection
panel
consists
of
Nobel
laureates
Harry
M.
Markowitz,
Robert
C.
Merton,
Myron
S.
Scholes,
and
William
F.
Sharpe.
Professors Harris, Namvar, and Phillips’s paper, Price Inflation and Wealth Transfer During the 2008 SEC Short Sale Ban which appeared in the second quarter 2013 issue of Journal of Investment Management, focuses on the turmoil in financial markets following the collapse of Lehman Brothers Holdings Inc., a former global financial services firm. In 2008 the Securities and Exchange Commission (SEC) banned short selling of financial sector stocks in the United States. The objective was to restore market equilibrium and stabilize prices by removing this source of downward pressure. Their research estimates that the short sale ban inflated prices of effected stocks by approximately 10%-12%. The effect of the ban was not permanent, thus investors that purchased stock during the ban paid more than they would have otherwise. The research provides a conservative estimate of $2.3-$4.9 billion USD in wealth transfer from buyers to sellers as a result of the ban.
This co-authored paper is a continued demonstration of how academic research contributes to the formation of financial market regulation and oversight policy. Analysis of the implications of the short sale ban was broad and varied by universities around the world. In an interview with Reuters, Christopher Cox, former chair of the SEC commented, “knowing what we know now, I believe on balance, the commission would not do it [short-sale ban on financials] again. The costs appear to outweigh the benefits”.
The Journal of Investment Management has recently been ranked 8 out of 41 financial journals for global impact and first among practitioner publications. The Special Distinction Award, along with the Harry M. Markowitz Award will be announced later this year at the Spring 2014 JOIM Conference.
Professor Phillips joined the University of Waterloo in 2009 after completing his PhD in finance at the University of Alberta. Prof. Phillips currently teaches finance to undergraduate students at the School.