Hazem Daouk is a

financial economist Financial economics, also known as finance, is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on ''both sides'' of a trade".William F. Sharpe"Financial ...

, known for his work on

securities regulation Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...

, especially

insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...

earnings management Earnings management, in accounting, is the act of intentionally influencing the process of financial reporting to obtain some private gain.Schipper, Katherine. 1989. “Commentary on Earnings Management.” ''Accounting Horizons'' (December): 91� ...

and short selling. He is a professor at

Cornell University Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...

where he holds the Peter J. & Stephanie J. Nolan chair. His articles have been cited over 4,000 times (

Google Scholar Google Scholar is a freely accessible web search engine that indexes the full text or metadata of scholarly literature across an array of publishing formats and disciplines. Released in beta in November 2004, the Google Scholar index includes p ...

). Daouk is the general manager of United Insurance Company. In 1998, his research uncovered the rampant insider trading on the Mexican Stock Exchange.“When an event is not an event: The curious case of an emerging market”
(with U. Bhattacharya, B. Jorgenson, and C. Kehr), '' Journal of Financial Economics'', 2000, 55, 69-101. This led to many questions about the value and the enforceability of insider trading laws. The study won the Best Academic Paper Award offered by the International Investment Forum at the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...

. In later research, Daouk conducted a comprehensive survey of insider trading laws and prosecution in about a hundred countries that have a stock market. He then showed that countries that enforce insider trading laws reduce the cost of financing of companies by many percentage points. This is because outside investors no longer require to be compensated for the money they lose from trading with better-informed insiders. On the other hand, having the law without enforcing it, does not do anything.“The world price of insider trading”
(with U. Bhattacharya), ''Journal of Finance'', 2002, 57, 75-108. Reprinted in Claessens S. an
L. Laeven
(ed), 2006
“A reader in international corporate finance”

World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...

, Herndon, VA, USA. This research was nominated for the

Smith Breeden Prize ''The Journal of Finance'' is a peer-reviewed academic journal published by Wiley-Blackwell on behalf of the American Finance Association. It was established in 1946 and is considered to be one of the premier finance journals. The editor-in-chief i ...

for Best Paper in the '' Journal of Finance'' for the year 2002. A little before the

Enron scandal The Enron scandal was an accounting scandal involving Enron Corporation, an American energy company based in Houston, Texas. Upon being publicized in October 2001, the company declared bankruptcy and its accounting firm, Arthur Andersen then on ...

, Daouk was investigating whether informational risk associated with accounting

earnings quality Earnings quality, also known as quality of earnings (QoE), in accounting, refers to the ability of reported earnings (net profit/income) to predict a company's future earnings. It is an assessment criterion for how "repeatable, controllable and ...

impacts stock markets around the world (he analyzed financial statements from 34 countries for the period 1985-1998). He found that accounting manipulation in a country, increases significantly the cost of financing of companies and reduces liquidity.“The world price of earnings opacity”
(with U. Bhattacharya and M. Welker), ''

Accounting Review ''The Accounting Review'' is a bimonthly peer-reviewed academic journal published by the American Accounting Association (AAA) that covers accounting with a scope encompassing any accounting-related subject and any research methodology. ''The Accou ...

'', 2003, 78, 641-678. He also found that the country with the most accounting manipulation was

Greece Greece,, or , romanized: ', officially the Hellenic Republic, is a country in Southeast Europe. It is situated on the southern tip of the Balkans, and is located at the crossroads of Europe, Asia, and Africa. Greece shares land borders with ...

. A year later, the

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...

issued a formal warning after Greece was found to have falsified budget deficit data in run-up to joining the

eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU policies ...

. A few years later, the

Greek debt crisis Greece faced a sovereign debt crisis in the aftermath of the financial crisis of 2007–2008. Widely known in the country as The Crisis (Greek: Η Κρίση), it reached the populace as a series of sudden reforms and austerity measures that le ...

started. Daouk is also known for his research that documents short selling laws and practice in about a hundred stock markets in the world. The magazine ''

The Banker ''The Banker'' is an English-language monthly international financial affairs publication owned by ''The Financial Times'' Ltd. and edited in London, United Kingdom. The magazine was first published in January 1926 through founding Editor, Brend ...

'' has written that "Most Western regulatory bodies tend to subscribe broadly to the findings" of Daouk, which concluded that when short selling is possible, stock prices are less volatile and there is greater liquidity. However, in an interview with the same magazine, he stated that he did not oppose the temporary restrictions on short selling that were enacted in different countries in reaction to the financial crisis.“Market-wide short-selling restrictions”
(with A. Charoenrook), Cornell University working paper, 2005.Beck, John
(October 3, 2011) �
Market controls: Does intervention work?
�� ''

'', cover story.

Publications (selection)

References

{{DEFAULTSORT:Daouk, Hazem Year of birth missing (living people) Living people American economists Financial economists Cornell University faculty Place of birth missing (living people)