Interaction of Market Discipline and Public Policy: Discussion

Posted: 28 Sep 2004

See all articles by Shyam Sunder

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Date Written: 2004


The remarks in this paper consist of two parts. The first part concerns the linkages established in the three excellent papers among accounting, corporate governance, and market discipline. The second part discusses the possible uses and abuses of market discipline to define and develop efficient accounting institutions. Several speakers have referred to the choice of whether we look at the glass of market discipline to be half full or half empty. Experience with the promise and failure of market discipline in accounting suggests that we would be best off if we keep an open mind, and assess the efficient application of market discipline on a case-by-case basis. Neither general reliance on, nor the avoidance of, the market discipline offers the prospect of developing efficient accounting institutions.

Keywords: Accounting, regulation, corporate governance, market discipline

JEL Classification: M41, G34, G38, L51

Suggested Citation

Sunder, Shyam, Interaction of Market Discipline and Public Policy: Discussion (2004). MARKET DISCIPLINE ACROSS COUNTRIES AND INDUSTRIES, Claudio Borio, William Curt Hunter, George Kaufman, and Kostas Tsatsaronis, eds., pp. 341-345, MIT Press, 2004. Available at SSRN:

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)


Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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