The Effectiveness of Britain's Financial Service Authority: An Economic Analysis
AbstractSweeping regulatory reforms in Britain resulted in the formation of the Financial Services Authority (FSA). Because greater transparency of information is a major objective for this Act, shifting from one information system to another has re-distributive effects. We identify these effects at a sector level and their drivers at the firm level. At a sector level, FSA has generally increased the precision of investors’ priors reducing the information risk component of the cost of capital. At a firm level, large firms act as “Stackelberg leaders” in voluntary disclosure games. FSA regulation shifts power from leaders to “followers”.
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Bibliographic InfoPaper provided by Henley Business School, Reading University in its series ICMA Centre Discussion Papers in Finance with number icma-dp2004-11.
Length: 59 pages
Date of creation: Jun 2004
Date of revision:
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More information through EDIRC
Disclosure; Regulation; Game Theory; Stackelberg Leader; Cost of Capital: information asymmetry;
Find related papers by JEL classification:
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G2 - Financial Economics - - Financial Institutions and Services
- M4 - Business Administration and Business Economics; Marketing; Accounting - - Accounting
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