In order for capital markets to function well, investors need accurate information about securities. If investors do not trust firms’ disclosures, they will discount what they are willing to pay for securities, increasing the cost of capital and thereby making it more difficult, even for honest firms, to fund productive endeavors. Moreover, investment decisions based on inaccurate information distort the efficient allocation of resources in an economy.
The Columbia Law School Center on Corporate Governance recently hosted a conference on M&A and Corporate Governance at which Columbia Law Professors Merritt B. Fox and Joshua Mitts.