Einde inhoudsopgave
The Decoupling of Voting and Economic Ownership (IVOR nr. 88) 2012/1.2.1.0
1.2.1.0 Introduction
mr. M.C. Schouten, datum 01-06-2012
- Datum
01-06-2012
- Auteur
mr. M.C. Schouten
- JCDI
JCDI:ADS597129:1
- Vakgebied(en)
Ondernemingsrecht / Rechtspersonenrecht
Voetnoten
Voetnoten
Eugene F. Fama, Efficient Capital Markets: A Review of Theory and Empirical Work, 25 J. Fin. 383 (1970).
Fox et al., supra note 4, at 342.
Id. at 344.
Id. at 345, 350.
Id. at 348.
Id. at 368.
An important question in the debate on mandatory issuer disclosure is whether it is necessary to mandate issuers to disclose information in order for such information to be impounded in share prices. Some scholars have argued that issuers can be expected to voluntarily disclose their private information as a signal of their products' quality. See, eg., Roberta Romano, Empowering Investors: A Market Approach to Securities Regulation, 107 Yale L.J. 2359, 2373-80 (1998). Even if this argument holds true for issuers, it is doubtful whether it does so for shareholders, given the difference in incentives between them. For this reason, it is assumed in this Chapter that a market solution is unlikely to produce a socially desirable level of ownership disclosure. For a discussion of potential costs of mandatory ownership disclosure, see infra note 244 and accompanying text.
One definition of an efficient market is a market in which prices always fully reflect available information.1 The traditional argument in support of mandatory issuer disclosure is that
…in the absence of regulation, the existence of externalities will result in market failure whereby too little information will be incorporated into share prices. Implicit in this positron is the belief that mandatory disclosure tules results in meaningful issuer disclosures that would otherwise not be forthcoming and that these disclosures add to share price accuracy.2
An important study has tested this claim empirically by studying the impact of enhanced issuer disclosure requirements.3 The authors distinguish between the concept of "price accuracy," which refers to the extent to which share prices offer a good prediction of farms' future cash flows, and "share price informedness," or the extent to which a share price reflects the available fundamental information.4 They define "fundamental information" as information that helps in predicting future cash flows more precisely.5 The results of the study suggest that share prices became more informed as a result of the enhanced disclosure requirements, which supports the view that mandatory issuer disclosure can increase share price accuracy and share price informedness.6
To determine whether mandatory ownership disclosure could yield similar benefits, the key questions are (1) whether information on major shareholdings constitutes fundamental information, and (2) whether disclosure of major transactions can be instrumental in conveying other, underlying fundamental information to the market.7 The remainder of this section argues that both are true.