Monday, June 2, 2014

Read this Book: The Failure of Mandated Disclosure

About a month ago, I noted several books that looked interesting. One of them was More than You Wanted to Know: The Failure of Mandated Disclosure, by Omri Ben-Shahar and Carl E. Schneider. I have now had an opportunity to read it, and it is a must-read for anyone interested in disclosure requirements of any kind—consumer disclosure, securities disclosure, or whatever.

Ben-Shahar and Schneider focus primarily on consumer disclosure—the dozens of pages we must sign when we buy a house; all the warning labels on products (Do not dry your hair while sitting in water); the click-through licenses we all ignore on the Internet. For many reasons, they argue, that mandatory disclosure is unlikely to provide much protection to consumers. It is “a failed regulatory method,” typically used, not because it works, but because it allows legislatures to respond to calls for action at little cost to government.

They don’t discuss securities regulation in any detail, although they do refer to it from time to time. But the book is obviously relevant to securities law. Ben-Shahar’s and Schneider’s discussion goes far beyond the well-known Easterbrook and Fischel argument against mandatory disclosure. [Frank H. Easterbrook and Daniel R. Fischel, Mandatory Disclosure and the Protection of Investors, 70 VA. L. REV. 669 (1984)]

Whether you agree with their thesis or not, this book is definitely worth reading. And, surprise of surprises, it is written by two law professors who actually know how to write well. None of the usual turgid law-review prose. I enjoyed reading this book.

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