Information Asymmetry and the Protection of Investors
55 Pages Posted: 14 Aug 2018 Last revised: 30 Jan 2019
Date Written: January 23, 2019
To some, the reductions in information asymmetry provided by the main securities-specific disclosure, fraud, and insider-trading laws help ordinary investors in meaningful ways. To others, whatever their larger value, such reductions do little, if anything for ordinary investors. For decades, these two sides of this investor-protection divide have mostly talked past each other.
This Article asserts that the reductions in information asymmetry provided by the core securities laws likely harm buy-and-hold ordinary investors. It also offers closely related theories about how those reductions affect ordinary investors as a whole. These positive conclusions should lead to a more informed discussion of securities law among policymakers, commentators, and market participants. They should also help shift the focus of investor-protection efforts away from the main securities laws and to areas of regulation that have received relatively little attention to date.
Keywords: Securities Regulation, Capital Markets Regulation
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