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The Multi-Faceted Concept of Transparency

Author

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  • Forssbaeck, Jens

    () (Lund University)

  • Oxel, Lars

    () (Research Institute of Industrial Economics (IFN))

Abstract

Transparency has become a catchword and in the economic-political debate is often seen as a universal remedy for all sorts of problems. In this paper, we analyze and discuss the meaning and use of the concept of transparency in economic research. We look for common denominators across different areas where the concept is used, and find that transparency in essence is about reductions in information asymmetries, and therefore entails the transfer of information from a sender to a receiver. Transparency goes beyond mere information disclosure in that it has a demand-side dimension: the information transferred should be trustworthy and have a value to the receiver. We emphasize the distinction between ex ante transparency – related to predictability – and ex post transparency – related to accountability. In economics, increased transparency is mostly rationalized on grounds of improving efficiency, but sometimes transparency is properly viewed simply as a right to know. Complementarities between different types of transparency are pervasive, and its causes and effects typically co-determined – i.e. transparency is endogenous. As a means to improve competitiveness and economic growth, transparency of economic policy and corporate as well as institutional transparency interact. We challenge the view that more transparency is always better and argue for concave net benefits and the existence of optimal transparency, but optimality varies across policy areas, institutional settings, industries and individual firms.

Suggested Citation

  • Forssbaeck, Jens & Oxel, Lars, 2014. "The Multi-Faceted Concept of Transparency," Working Paper Series 1013, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:1013
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    Cited by:

    1. Oxelheim, Lars, 2019. "Optimal vs satisfactory transparency: The impact of global macroeconomic fluctuations on corporate competitiveness," International Business Review, Elsevier, vol. 28(1), pages 190-206.
    2. Håkan Jankensgård & Alf Alviniussen & Lars Oxelheim, 2016. "Why FX Risk Management Is Broken–and What Boards Need to Know to Fix It," Journal of Applied Corporate Finance, Morgan Stanley, vol. 28(1), pages 46-61, March.
    3. Adams, Samuel & Atsu, Francis, 2015. "Assessing the distributional effects of regulation in developing countries," Journal of Policy Modeling, Elsevier, vol. 37(5), pages 713-725.

    More about this item

    Keywords

    Asymmetric Information; Transfer of Information; Moral Hazard; Adverse Selection; ransparency; Optimal Transparency; Ex Ante Transparency; Ex Post Transparency; Predictability; Accountability; Economic Policy; Economic Growth;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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