2 - Introduction

Summary

Part I discussed the institutional framework governing European securities regulation and identified the main actors that are involved in prospectus disclosure regulation and enforcement. Part II deals with EU prospectus disclosure regulation and the regulatory strategies that it implements. This introductory chapter discusses the main issues that disclosure regulation has raised for the literature and defines the perspective that I will adopt in the coming chapters.

Prospectus disclosure regulation is about information disclosure; it is about mandating issuers to disclose information when they seek to have securities admitted to trading on a regulated market or raise capital with the public. Mandatory information obligations are so familiar in every day life that the question of whether disclosure should be mandated when a firm seeks to raise capital strikes one as somewhat odd. Yet, historically, the question has been much debated, especially in the USA. Mandatory disclosure was first questioned and criticised during the 1960s and 1970s by authors such as Stigler or Benston. For Benston, for example, the Securities Exchange Act of 1934 had no meaningful positive impact and, therefore, seemingly no raison d'être. In the 1980s, the discussion moved forward as influential law and economics scholars adopted a less sanguine view, but still had reservations. At the end of the 1990s, the debate on mandatory disclosure spilled over and gained new momentum as proponents and opponents of regulatory competition sought to make their case in favour of or against issuer choice in the field of securities regulation.