The Benefits and Costs of Transparency: A Model of Disclosure Based Regulation

45 Pages Posted: 17 Jul 2002

See all articles by David Weil

David Weil

Brandeis University - The Heller School for Social Policy and Management

Date Written: June 2002

Abstract

The Enron scandal has raised questions regarding the adequacy of the present system of financial disclosure. At the same time, public policies increasingly use information disclosure as a regulatory device in a variety of areas beyond financial reporting. This paper provides a framework for evaluating whether disclosure-based regulatory systems improve over time, as measured by use, accuracy, and scope of information provided to users. The paper examines the benefits and costs of the provision of information from the disclosers' and information users' perspectives. It shows how these comparative benefits and costs affect both the initial architecture of disclosure systems and the interaction of disclosers and users once systems have been established. The combined effects provide the basis for predicting whether disclosure systems will improve over time.

Keywords: disclosure, regulation, transparency, risk

JEL Classification: L51, K32, I18, D8, D82, G18, J28

Suggested Citation

Weil, David, The Benefits and Costs of Transparency: A Model of Disclosure Based Regulation (June 2002). Available at SSRN: https://ssrn.com/abstract=316145 or http://dx.doi.org/10.2139/ssrn.316145

David Weil (Contact Author)

Brandeis University - The Heller School for Social Policy and Management ( email )

P.O. Box 549110/MS 035
415 South Street
Waltham, MA 02454
United States

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