Creditor Protection Through Mandatory Disclosure

Hanno Merkt

University of Freiburg - Faculty of Law

European Business Organization Law Review (EBOR), Vol. 7, 2006

Creditor protection through mandatory disclosure since long is a highly debated issue among corporate lawyers. This paper considers whether the legal system should compel corporations to disclose information publicly in order to better protect its creditors. First, the paper elaborates on the various economic rationales of mandatory disclosure advanced by proponents of that approach. Second, it rehearses the theoretical framework of mandatory disclosure. Third, it gives a brief overview of the law on those mandatory disclosure requirements that primarily or at least in part aim at corporate creditor protection. Fourth, it outlines limitations of mandatory disclosure with respect to creditors and debtor companies. Fifth, it briefly surveys several important challenges to mandatory disclosure regulation with respect to materiality, standardization, comprehensibility and timeliness. And finally, this paper deals with various legislative options to enforce creditor-protective mandatory disclosure.

Keywords: creditor protection, mandatory disclosure, Inspire Art, materiality of information, soft information, Basel II, standardization, comprehensibility, timeliness, enforcement of disclosure duties

JEL Classification: K20

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Date posted: February 19, 2007  

Suggested Citation

Merkt, Hanno, Creditor Protection Through Mandatory Disclosure. European Business Organization Law Review (EBOR), Vol. 7, 2006. Available at SSRN: https://ssrn.com/abstract=963327

Contact Information

Hanno Merkt (Contact Author)
University of Freiburg - Faculty of Law ( email )
D-79098 Freiburg
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