This week, we enjoyed this article on corporate governance and the creation of the SEC, which discusses the effects of the creation of the SEC on corporate governance.

The authors conclude that there was a 30 percent reduction in board independence, but no corresponding effects on firm valuations. They explain that the evidence is consistent with a "substitution of governance mechanisms" hypothesis, meaning that firms endogenously trade off market-based (board) governance and government-sponsored (SEC) governance.