Acceso usuarios
John Holland
Companies, as primary disseminators of information, and financial institutions, as major recipients, have economic incentives to self-regulate the transmission and usage of price-sensitive information. These include increased (lost) reputation costs and adverse share price penalties arising from poor management of information disclosure. The economic motivation for self-regulation is seen as conceptually linked to but distinct from legislative changes. Self-regulation has the strong support of economic efficiency arguments, whereas recent additional new legislative changes do not. This article examines a major corporate and institutional response to the new regulatory climate—to internalize part of the regulatory process during their regular relationship communications. Relationships between the case companies and institutions already exist for transaction purposes. They are used as a convenient and low-cost means to pursue self-regulation and to avoid errors of price-sensitive information release. This self-regulatory process is illustrated using case material. It is clear from the response pattern presented that the development of a self-regulatory framework by the parties has been an iterative one. The corporate and institutional systems that have been evolving seem to be significantly influenced by the regulatory trends. The regulatory changes appear to have played a role in increasing market costs incurred by those companies with poor stock market communication practices. The article ends by arguing that new proposals to change in the formal regulatory system should recognize that further legislation is unlikely to improve the poor prosecution record. Nevertheless, legislative changes can combine with and buttress the self-regulation process to create an effective regulatory system.
