On The Principle Of Moderation, Mandatory Disclosure Of Accounting Information

A demanding system of mandatory disclosure, which has become more demanding in the wake of the Sarbanes-Oxley Act of 2002, makes up the core of the securities regulation system. Securities regulation is motivated, in large part, by the assumption that more accounting information is better than less. After all, "sunlight is said to be the best of disinfectants; electric light the most efficient policeman." But sunlight can also be blinding.So the key question of this thesis is the moderate principle in mandatory disclosure, that is to say whether the more accounting information the investors process, the more proceeds they will get. Three things are needed for a regulatory regime based on disclosure, such as the securities laws, to be effective. First, how does the cost of the disclosure influence on the final gain of the investors. Second, whether the mandatory disclosure is definitely better than the discretionary disclosure. Third, and often overlooked, is that the users of the information - for example, investors - need to use the disclosed information effectively. Securities regulation focuses primarily on disclosing information, and pays relatively little attention to how the information is used - namely, how do investors search and process information and make decisions based on the information the securities laws make available?This thesis is started with the economic analysis of the mandatory disclosure, such as the marginal utility of the mandatory disclosure. And then outspreads the analysis from the three points of view as mentioned upwards. Finally, it probes into the "moderation" of the mandatory disclosure in practice.