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Learning from ecology: Financial reporting as a ‘commons’

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  • King, Thomas A.

Abstract

This note explores how the financial reporting environment for listed companies is a common good put at risk by participants with incentives to extract benefits at the cost of the investing public. Disclosure of misleading financial information confers economic gain for a few but pollutes the environment and reduces its usefulness for all. After showing how a variant of the prisoner's dilemma may explain Enron-era scandals, the note discusses how U.S. government intervention was the only practical solution to repair damage to the financial reporting Commons. The implication of this note is that government involvement in financial reporting is here to stay.

Suggested Citation

  • King, Thomas A., 2017. "Learning from ecology: Financial reporting as a ‘commons’," Research in Accounting Regulation, Elsevier, vol. 29(1), pages 75-78.
    • Handle: RePEc:eee:reacre:v:29:y:2017:i:1:p:75-78
    DOI: 10.1016/j.racreg.2017.04.008
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    References listed on IDEAS

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    1. Ron Kasznik & Maureen F. McNichols, 2002. "Does Meeting Earnings Expectations Matter? Evidence from Analyst Forecast Revisions and Share Prices," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 40(3), pages 727-759, June.
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