The Case for the Harmonization of Securities Disclosure Rules in the Global Market

Wednesday, January 1st, 1997 at 12:00 am by Uri Geiger
Uri Geiger, The Case for the Harmonization of Securities Disclosure Rules in the Global Market, 1997 Colum. Bus. L. Rev. 241

Over the last two decades we have witnessed the internationalization of the world’s securities markets. This dramatic change has been brought about by a combination of economic forces, technological innovations, and the deregulation of the major capital markets. In fact, many believe that internationalization has been the most significant development to affect the securities markets of the United States and many other countries. The internationalization of the world’s securities markets poses new challenges both for market participants and regulators. It is a new reality which requires a rethinking of securities regulations in a world which is significantly different not only from the world of the 1930s (when the American securities laws were enacted), but even from the world of just a decade ago. This article addresses the fundamental question posed by the internationalization of securities markets: Which regulatory approach should govern securities disclosure rules in the new global market– competition or harmonization? This question has an important practical aspect. The United States Securities and Exchange Commission (the “SEC” or the “Commission”) and the regulators of all other major securities markets announced their plan to start, in 1998, a rulemaking process aimed at adoption of international accounting and disclosure standards for companies engaged in multinational offerings and listings. This article offers a new analytical framework to evaluate the different approaches toward the regulation of securities disclosure rules in the global marketplace. Utilizing theories of economic regulation, regulatory competition, harmonization, transaction cost economics, information economics and game theory, the article makes the case for the harmonization of securities disclosure rules in the global market. This analysis goes beyond the existing literature on the process of internationalization and the question of whether U.S. disclosure standards are competitive. It enables regulators, scholars, practitioners and market participants to analyze the costs and benefits of both competition and harmonization.

Author Information

John M. Olin Fellow, Columbia University Center for Law and Economic Studies; Associate, Sullivan & Cromwell