This is beside the point, but I have not been impressed with the overseas call centers. I either can't understand what they are saying or they can't understand what I'm saying. Either way, I end up frustrated because my issue was not resolved. This is POOR CUSTOMER SERVICE!
JLP
AllThingsFinancial
Good point - the question is whether the marginal benefit of the information exceeds the cost of disclosure. Unfortunately, under mandated disclosure, the government sets the minimum level of disclosure. Since the politicians involved reap the benefits without bearing all the costs, they will likely mandate a disclosure amount that exceeds the amount chosen under a company self-selected regime.
I think Sarbanes Oxley is a good example - the costs of disclosure at that level might well be driving some companies private (or causing others to delay going public).
"So, the amount of disclosure serves as a signal of firm quality (in fact, even choosing not to disclose reveals information)."
It certainly signals something, but is that signal more or less revealing than actual disclosure? Which is marginally better?
Suppose the law would require disclosure of variable X.
Without the law, if a firm refuses to disclose X, we might speculate that variable X is not being disclosed because it's "bad" and we might further speculate as to how bad it is. So we'd have an information signal, but the actual information we'd have would be pretty weak, and largely speculative.
Under the disclosure rule, we actually KNOW X. We don't have to speculate at all.
I don't think anyone is arguing that NO information is revealed without the disclosure rule. Rather, the argument is that the level of information revealed is marginally higher under the disclosure rule.
Commenting by HaloScan
