Mandatory public reporting of financial information:

Question

Quizplus · Accepted Answer

Mandatory public reporting of financial information enhances the perceived fairness of the capital market by improving transparency and providing investors with important information about a company's financial performance and prospects. This can lead to more efficient capital allocation and better pricing of securities, ultimately benefiting both investors and companies.

Answer: B and D
 While mandatory public reporting of financial information can provide important benefits, it can also have costs. For example, companies may need to generate a lot of information that would not otherwise be produced by its accounting system, leading to increased costs for compliance. Additionally, the costs of obtaining and processing this information can be significant for investors and other stakeholders, potentially increasing the total cost to society of obtaining the information. Thus, choices B and D both highlight potential costs of mandatory public reporting.

Mandatory Public Reporting of Financial Information