Paper #1090

Title:

Mandatory accounting disclosure by small private companies

Author:

Benito Arruñada

Date:

May 2008

Abstract:

This article analyzes how mandatory accounting disclosure is grounded on different rationales for private and public companies. It also explores technological changes, such as computerised databases and the Internet, which have recently made disclosure of company accounts by small companies potentially less costly and more valuable, thanks to electronic filing and universal online access to credit information systems. These recent developments favour policies that would expand the scope of mandatory publication for small companies in countries where it is voluntary. They also encourage policies to reduce the costs and enhance the value of disclosure through administrative reforms of filing, archive and retrieval systems. Survey and registry evidence on how the information in the accounts is valued and used by companies is consistent with these claims about the evolution of the tradeoff of costs and benefits that should guide policy in this area.

Keywords:

Financial disclosure, company accounts, credit registries, business simplification

JEL codes:

G32, K22, M48

Area of Research:

Management and Organization Studies / Business Economics and Industrial Organization

Published in:

European Journal of Law and Economics, Vol. 32(3), 377-413, 2011

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