Publisher
Springer Science and Business Media LLC
Subject
Law,Political Science and International Relations,Business and International Management
Reference95 articles.
1. The role played by corporate disclosure as a means to enhance the informational efficiency of the securities market is highlighted by many authors: see, inter alia, Edmund W. Kitch, ‘The Theory and Practice of Securities Disclosure’, 61 Brooklyn Law Review (1995) p. 763 (also for a detailed analysis of the issue); Wolfgang Schün, ‘Corporate Disclosure in a Competitive Environment — The Quest for a European Framework for Mandatory Disclosure’, 6 Journal of Corporate Law Studies (2006) p. 259, at pp. 272–3 (who also recognises the concurrent role of disclosure in mitigating agency problems: see the next footnote for further references). For a comprehensive account of the mechanics through which market prices reflect the information, see the classical contribution of Ronald J. Gilson and Reinier H. Kraakman, ‘The Mechanisms of Market Efficiency’, 70 Virginia Law Review (1984) p. 549.
2. See generally Paul J. Mahoney, ‘Mandatory Disclosure as a Solution to Agency Problems’, 62 University of Chicago Law Review (1995) p. 1047; Merritt B. Fox, ‘Retaining Mandatory Securities Disclosure: Why Issuer Choice Is Not Investor Empowerment’, 85 Virginia Law Review (1999) p. 1335, at pp. 1363–9.
3. The issue of the desirability of mandatory disclosure — as opposed to market-based approaches to the issue of information production in capital markets — has been the subject of a long-lasting debate which started with the seminal contributions of George Stigler and George Benston who both adopted a critical perspective on the US federal securities regulation enacted in 1933 and 1934 in response to the 1929 market crash. See George J. Stigler, ‘Public Regulation of the Securities Market’, 37 Journal of Business (1964) p. 117; George J. Benston, ‘Required Disclosure and the Stock Market: An Evaluation of the Securities Exchange Act of 1934’, 63 American Economic Review (1973) p. 132. Another early and influential contribution that shares the same critical perspective is that of Henry Manne which ignited the debate on insider trading. See Henry G. Manne, Insider Trading and the Stock Market (New York, Free Press ed. 1966). More recent contributions are those of Frank H. Easterbrook and Daniel R. Fischel, ‘Mandatory Disclosure and the Protection of Investors’, 70 Virginia Law Review (1984) p. 669; John C. Coffee, Jr, ‘Market Failure and the Economic Case for a Mandatory Disclosure System’, 70 Virginia Law Review (1984) p. 717. Today, there seems to be general agreement on the desirability of mandatory disclosure as a means of both enhanced investor protection and further development of the securities markets. Rather than having been definitively extinguished, however, the debate has somehow shifted from its original terms: from the most recent perspective, the dilemma is no longer between mandatory disclosure and full deregulation, but rather between a model of centralised, federal regulation and a Delaware-like model, based on the issuer’s choice between different and competing regulatory options. See Roberta Romano, ‘Empowering Investors: A Market Approach to Securities Regulation’, 107 Yale Law Journal (1998) [hereinafter: ‘Empowering Investors’] p. 2359; idem, ‘The Need for Competition in International Securities Regulation’, Yale ICF Working Paper No. 258 (2001), available at: ; Fox, supra n. 2; Stephen J. Choi and Andrew T. Guzman, ‘National Laws, International Money: Regulation in a Global Capital Market’, 65 Fordham Law Review (1997) p. 1855. See also Stephen M. Bainbridge, ‘Mandatory Disclosure, a Behavioral Analysis’, 68 University of Cincinnati Law Review (2000) p. 1023, for a review of the debate (at pp. 1028–34) and another viewpoint on the issue. Further perspectives are offered by Edward Rock, ‘Securities Regulation as Lobster Trap: A Credible Commitment Theory of Mandatory Disclosure’, 23 Cardozo Law Review (2002) p. 675; Mahoney, supra n. 2. Finally, a comprehensive survey of the empirical literature is provided by Paul M. Healy and Krishna G. Palepu, ‘Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure Literature’, 31 Journal of Accounting and Economics (2001) p. 405.
4. Contract law usually forbids parties to give each other false information during the negotiations but generally acknowledges the need to retain a certain lack of transparency. More specifically, in some circumstances, it allows parties to refrain from disclosing significant information that would be useful for the counterparty. Such right of non-disclosure — especially when granted to the buyer — is aimed at protecting private incentives for the acquisition of new information: see Anthony T. Kronman, ‘Disclosure, Mistake, and the Law of Contracts’, 7 Journal of Legal Studies (1978) p. 1, at pp. 2 and 13–18; Steven Shavell, ‘Acquisition and Disclosure of Information Prior to Sale’, 25 RAND Journal of Economics (1994) p. 20, esp. pp. 21 and 33. See also Saul Levmore, ‘Securities and Secrets: Insider Trading and the Law of Contracts’, 68 Virginia Law Review (1982) p. 117, at pp. 132–144.
5. See infra n. 29 and accompanying text.
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