COMM 318 Lecture Notes - Lecture 6: Due Process, Dividend Policy, Underwriting
8 Apr 2016
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Document Summary
Standard seing is a form of regulaion that is ulimately the responsibility of a country"s government or legislature. Governments delegate the responsibility for standard seing to a speciic agency (sec) Agencies delegate standard seing responsibility to semi-autonomous bodies (iasb, acsb, fasb) View standard seter as mediator between conlict of interest b/w investors and managers. How to combine fr and eicient contracing roles of accouning informaion. First-best: the amount of informaion that equates the marginal social beneits to the marginal social costs. Suppliers of informaion don"t always get paid for the informaion they produce so they will under produce relaive to irst-best. Regulaion has a cost so then it becomes the extent of standard seing. Too much = greater cost on society than the beneits of lower informaion asymmetry. Deregulaion market forces can be relied on to moivate irms to produce enough inancial informaion (this changes when enron and worldcom collapsed 2008)
