The bases of securities information disclosure

Abstract

The study of the protection of investors through information disclosure regulation is not new. In fact, it is almost as old as many major securities markets and indeed older than many emerging markets, including Nigeria. However, over the years, scholars have not only disagreed on the importance of information disclosure to investors protection, there also has been an ongoing debate on whether the disclosure should be voluntary or mandatory. The voluntary disclosure school argues that the securities market and securities issuers, reputation consciousness provide adequate incentives for issuers to voluntarily provide socially efficient level of information. Conversely, the mandatory disclosure school is generally of the opinion that without direct and explicit governmental regulation requiring disclosure, securities issuers would be selective and evasive in disclosure. Thus, disclosure would equalise access to information, "thereby, starting everyone at the same place in the competition to find the best investment. Disclosure would, at the same time, hinder fraud and improve the morals of the marketplace".