Market Regulation

Accounting information is market sensitive; its release is, therefore, carefully controlled by the regulators. Publicly-held corporations are required to orchestrate the publication of their periodic results so that no participant in the market is materially disadvantaged by learning of them later than any other; and there are strict laws against insiders disclosing market-sensitive information. Analysis of market price movements prior to the official disclosure of such information shows clearly however that the insider trading laws are ineffective. It is certainly arguable – and, indeed, I would argue – that compulsory open-book accounting would be far more effective than the insider trading laws.

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