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The impact of international information disclosure requirements on market discipline

by Leyshon, Kirby I.

Abstract

Financial regulators are challenged with finding the most efficient and effective ways to monitor banks given an expanding and complex international financial system. Market discipline has grown in importance as a way to incentivize banks from taking on unnecessary risk (Barth et al., 2004; Nier & Baumann, 2006). One of the main drivers of market discipline is information disclosure. While the literature on market discipline is expansive, there are no known studies on the impact of individual information disclosure requirements on market discipline. Our study investigates which specific disclosure requirements influence financial investors to discipline banks and which do not. We find that half of the information disclosure requirements potentially reduce market discipline practices while the other half may enhance financial investors’ response to bank risk.

Note

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Includes bibliographical references.

Administrative Notes

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Copyright
Copyright restrictions apply.
Publisher
Colorado College
PID
coccc:11228
Digital Origin
born digital
Extent
45 pages