Disclosure and financial reporting regulation.

Abstract

Recent events have spurred the debate about financial reporting and disclosure regulations around the world. International financial crises and corporate scandals brought ever greater reporting and disclosure requirements. The Asian Financial Crisis of 1997, the Enron debacle in the U.S., and the recent credit market crisis are only a few examples. Only in Europe millions of firms are forced to disclose financial information each year. Despite the claimed importance of corporate transparency, there is limited research on the costs and benefits of financial reporting and disclosure regulation. Most of the literature focuses on voluntary disclosures of financial information of U.S. publicly listed firms. While these studies provide important insights into the private benefits associated with voluntary reporting, the costs and benefits of mandatory information disclosures are still unknown, particularly for non-listed privately held firms. The proposed research aims to close these gaps in the literature. Drawing on insights from theoretical and empirical studies from accounting, economics, finance and law, we will examine firm-specific as well as macro-level costs and benefits of private firms’ forced disclosure activities (e.g. credit ratings, productivity). Our comprehensive empirical analysis of these questions should prove useful to researchers, as well as standard setters, policy makers, and regulators, debating the economic consequences of past and future regulatory choices.nrpages: 140status: publishe