Friday, September 02, 2011

More Accounting Transparency May Distort Markets

It is now believed that in the years preceding the recent financial turmoil, banks took excessive risks that weren’t disclosed, and regulators were only able to intervene after widespread panic had brought the system to its knees.

More transparency, it is argued, could have allowed the market to discipline such excessive risk-taking behavior. Yet there is evidence that, in many situations, greater disclosure may not be good corporate governance or even desirable.

See full Article.