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An Argument for Imposing Disclosure Requirements on Public Companies

74 Pages Posted: 4 Aug 2004 Last revised: 2 Mar 2009

Michael D. Guttentag

Loyola Marymount University

Date Written: February 26, 2009

Abstract

This Article addresses the lack of adequate justification for federally imposed disclosure requirements by starting de novo, and considering anew which, if any, disclosure requirements should be imposed on public companies. To do this, the significant costs and benefits of public company disclosures are identified. Then a market failure argument for regulating public company disclosures is developed. Finally, this framework is used to evaluate a specific disclosure requirement. The analysis leads to a surprising conclusion. Federal public company disclosure requirements are inadequate in at least one important respect, not because there are too many disclosure requirements, but because there are too few. Public company managers should be required to disclose substantially more of the information they use to manage their firms' operations than they are currently required to disclose.

Keywords: Disclosure, regulation

JEL Classification: K22, L51

Suggested Citation

Guttentag, Michael D., An Argument for Imposing Disclosure Requirements on Public Companies (February 26, 2009). Florida State University Law Review, No. 32, 2004. Available at SSRN: https://ssrn.com/abstract=572463

Michael D. Guttentag (Contact Author)

Loyola Marymount University ( email )

7900 Loyola Boulevard
Los Angeles, CA 90045
United States

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