Disclosure Paternalism

dc.contributor.author Bertomeu, Jeremy
dc.date.accessioned 2021-11-12T18:43:27Z
dc.date.available 2021-11-12T18:43:27Z
dc.date.issued 2021
dc.description.abstract Investors lacking good judgment may miscalculate the strategic motives causing withholding of material information. The resulting inadequate professional skepticism encourages excessively optimistic expectations after a non-disclosure and break the economic forces causing immediate unravelling to full disclosure. A regulator may intervene to correct the problem by mandating disclosure over events that would be otherwise be withheld; however, such paternalistic interventions come with a severe drawback: over-protection prevents investors from learning to be skeptical through repeated experiences of nondisclosure losses. While an unregulated market will converge over time to full disclosure, paternalism will lead to cycles characterized by high levels of compliance followed by excessive optimism. The model further predicts an association between positive price drift and transparency, and explains why regulators may sometimes choose to shut down entire markets.
dc.identifier.uri http://hdl.handle.net/10125/76931
dc.subject accounting
dc.subject standards
dc.subject regulation
dc.subject disclosure
dc.subject unravelling
dc.title Disclosure Paternalism
dc.type.dcmi Text
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