Abstract

This article develops a model in which firms may commit to disclose varying amounts of two types of information, accuracy information and agency information, and in which a regulator may also mandate disclosures. The resulting analysis provides a way to better understand the relationship between disclosure regulation and social welfare, including issues such as: how disclosure regulation can generate social welfare gains (contra Dye, 1990; Admati & Pfleiderer, 2000), why imposing disclosure requirements on only certain firms and certain information may be efficient, and why stricter mandatory disclosure requirements may be an efficient regulatory response to more robust public securities markets (contra La Porta, Lopez de Silanes, & Shleifer, 2006).

Submitted: August 11, 2006 · Accepted: February 7, 2007 · Published: December 27, 2007

Recommended Citation

Guttentag, Michael (2007) "Accuracy Enhancement, Agency Costs, and Disclosure Regulation," Review of Law & Economics: Vol. 3 : Iss. 2, Article 15.
DOI: 10.2202/1555-5879.1121
Available at: http://www.bepress.com/rle/vol3/iss2/art15