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A major theme in the literature on bank regulation is that greater reliance on market forces can mitigate the moral hazard problem inherent in government sponsored deposit insurance. Specific proposals to impose greater market discipline on banks include minimum requirements on (1) uninsured subordinated debt financing (either fixed-term or with option-type features), and (2) private coinsurance on deposits. Both proposals amount to delegating the responsibility for bank regulation to various private sector claimholders. The results suggest that such delegation (with or without claims that include option-type features) may be ineffective in lowering bank risk, at least within the present regulatory and institutional framework. Alternative mechanisms exist that can mitigate the moral hazard problem; however, it may be necessary for the regulator/deposit insurer to be an integral part of the solution.

We develop an interactive framework to model speculation (over regulation) and regulation (of speculation) in a greenhouse gas (GHG) permits market. In our proposed model, big traders engage in speculation by strategically withholding and releasing permits to influence the temporal path of permit prices in order to maximize their profits. The national government/regulator has an incentive to stabilize permit prices by suitably manipulating stocks of permits. Thus, the GHG permits market can typically be characterized by circular interdependence in which big traders will be “gaming” the regulator to generate profits: the state of the market affects speculative behavior of traders that in turn impacts on government's behavior, which in turn impacts on the state of the market. The interactive framework explores the gaming between speculators and a regulator, or government, to shed crucial insights on the nature of equilibrium in possible global emissions trading schemes (GETS). By so doing, we are able to unravel potential pitfalls of any global trading system in pollution permits for arresting global warming. Once policy makers are aware of these pitfalls, for example, a “culture of speculation” as opposed to a culture of safety, they can devise a suitable mechanism to bypass these potential pitfalls.

A large literature studies why firms self-regulate and “signal green.” However, it has ignored that regulators have enforcement discretion, and may act strategically. We fill this gap. We build a game theoretic model of whether a firm should signal its type through substantial self-regulation. We find self-regulation is a double-edged sword: it can potentially preempt legislation, but it can also lead regulators to demand higher levels of compliance from greener firms if preemption fails. We show how self-regulatory decisions depend upon industry characteristics and political responsiveness to corporate environmental leadership. We have made a number of simplifying assumptions. We assume activist groups cannot challenge regulatory flexibility in court, and that regulatory penalties are fixed and are not collected by the regulator. Firms with low compliance costs confront a tradeoff regarding self-regulation. They can blend in with the rest of the industry, and take few self-regulatory steps. This reduces the risk of regulation somewhat, and preserves their ability to obtain regulatory flexibility should regulation be imposed. Alternatively, they can step up with substantial self-regulation. This better mitigates the risk of regulation, but at the risk of signaling low costs and becoming a target for stringent enforcement should regulation pass. Recent work has found negative market reactions to corporate claims of voluntary emissions reductions, despite the conventional wisdom that it “pays to be green.” We offer a new explanation to scholars and managers: regulatory discretion may undermine the ability of industry self-regulation to profitably preempt mandatory regulatory requirements.

To contrast the challenges for bank regulators in a physically small centre such as the Bahamas with those for regulators in New York or London. To identify how the small centres can best meet their challenges, noting especially that Basel II is going to make even more important the smooth working of home and host country regulatory co‐operation.

Contrasts are drawn from the author's personal experiences as a banking regulator in large and small centres and illustrated by examples from some of the latter. Likely reasons for regulatory “success or failure” in the smaller centres are then deduced and discussed.

Smaller host country regulators have limited resources but can leverage these in a number of ways. They are also already heavily dependent on the competence of the home regulators and their willingness to share information. Co‐operation is going to become more important with the adoption of Basel II. The success of what emerges will help determine the cost and effectiveness of large banks' overseas operations.

Home and host regulators need to make renewed efforts to co‐operate. One new initiative in the Bahamas is described to illustrate what might help.

The author is one of relatively few banking regulators who have worked at senior level in a large home country, is a small host country regulator and one who can therefore assess the issue from both sides of the fence.

The practice of management having control over auditor appointment and compensation is believed to be a fundamental cause for the lack of auditor independence. While researchers propose alternative auditor appointment procedures to improve auditor independence, there are a few settings that allow researchers to examine alternative auditor appointment procedures such as regulator designation of auditors. This research aims to investigate the effects of regulator designation of auditors and litigation risk on auditor independence in a Chinese setting

This study adopts a 2 × 2 between-subjects experimental design. A total of 110 surveys were sent out and 81 were collected from eastern China.

The results of an experiment with 81 Chinese auditors indicate that regulator designation of auditors improves auditor independence. In particular, auditors designated by the regulator feel less pressure from the audited company, perceive themselves to be more independent and are more willing to challenge the audited company’s aggressive financial reporting compared with those directly hired by the company. In addition, litigation risk moderates the effect of regulator designation of auditors on auditor independence such that regulator designation of auditors has a stronger impact on auditor independence when the litigation risk is low.

This study is also subject to limitations. First, regulator designation of auditors in China was examined. While regulator designation of auditors seems to improve auditor independence in the Chinese context, it is unclear if the same results will be observed in other economies, as China is a unique setting. For example, the majority of listed companies in China are under the control of government-related agencies. Consequently, the government has significant power in influencing auditor appointment policy. In contrast, the majority of other economies are more market-oriented with less government influence. Future studies in other markets will further enrich the understanding on regulator designation of auditors. Second, only regulator designation of auditors for state-owned enterprises was examined. It is unclear how regulator designation of auditors would affect non-state-owned enterprises. Moreover, future research could investigate the designation of auditors in other forms such as the designation of auditors by investors. Third, auditor appointment procedure may affect perceived risk of loss of client which in turn influences auditor independence. Future research could further investigate the mechanism through which regulator designation of auditors affect auditor independence.

Results of an experiment with 81 Chinese auditors show that regulator designation of auditors can improve auditor independence. In a decision context where auditors must provide judgments relating to a proposed audit adjustment that is quantitatively material and will affect the client’s ability to meet debt covenants, auditors designated by the State-Owned Assets Management Bureaus are more resistant to management pressure and are less willing to accept the management’s aggressive financial reporting practice than those directly hired by the company.

The purpose of this paper is to strengthen the theoretical understanding of the processes through which a new regulator seeks to gain legitimacy within an existing regulatory space. The authors do this by investigating the case of the Australian Charities and Not-for-profit Commission (ACNC).

Synthesising legitimacy theory with the concept of regulatory space, the authors analyse formal public discourse surrounding the establishment and operations of the ACNC.

Regulation is essentially a context-bound political process in which a new regulator needs to establish legitimacy to ensure its survival. It must convince its constituents that it has developed processes to operate effectively and professionally in addressing constituents’ needs, to bargain authoritatively with other regulators in establishing its operational boundaries, and to engage politically with government and constituents. Over a relatively short time, the ACNC built legitimacy, despite the political threats to its formal regulatory authority.

The conclusions are based on the analysis of one case. There is scope for further investigations of the processes by which new regulators establish their legitimacy in different contexts.

The potential for a political threat to the authority of a new regulator, and the difficulty of achieving regulatory reform, particularly in a federated system such as Australia, highlight the necessity for a new regulator to develop a compelling discourse of legitimacy.

The authors synthesise regulatory space and legitimacy perspectives, contributing to an understanding of the processes of regulation.

As demand mounts for a review of the UK’s privatized utilities regulatory system, focuses on an increasing public phenomenon ‐ that of conflict between regulators and regulatees. Identifies the factors contributing to the difficulties which the regulators face in carrying out their roles. Utilizes the benefit of hindsight to reach conclusions as to why the current attacks on the roles of the regulators are natural outcomes, flowing from the ways in which regulatory systems have been designed.

The purpose of this paper is to summarise the Law Commissions’ final report and draft Bill on the regulation of health and social care professionals.

To summarise the key recommendations that are relevant to adult safeguarding.

The final report concludes that new legislation is needed to govern the UK regulators of health and social care professionals.

The paper sets out the recommended new legal framework.