-  Faculty Experts   -  News by Topic   -  News by School Search News & Info WUSTL in the News   - Powered by Google WUSTL Home Public Affairs Home University News Medical News Sports News Radio Service Business, Law & Econ Culture & Living Science & Technology Contact Information TV/Radio Studio Visiting Our Campuses Campus Images Sports photography Commercial Filming    and Photography Commercial Use of    Names and Symbols Domain Name policy Record (newspaper) Campus Calendars WUSTL News Summary Publications Online Facts, Guides & Maps		Tip Sheet: Business, Law & Economics Tip sheets highlight timely news and events at Washington University in St. Louis. For more information on any of the stories below or for assistance in arranging interviews, please see the contact information listed with each story. For comments on the Business, Law & Economics news tips service, please contact the editor, Robert Batterson at (314) 935-5202 or batterson@olin.wustl.edu. Tips Sheets: Business, Law & Econ | Culture & Living | Medical Science & Health | Science & Technology SEC disclosure regulations may be overwhelming investors with too much information Media assistance: Jessica Roberts - (314) 935-5251 Source: Troy Paredes - (314) 935-8216 [St. Louis, Mo., March 2003] - Investors and legislators alike continue to be concerned about the true state of companies. Since the corporate accounting scandals of Enron, Tyco, WorldCom and others, there has been a legislative push for full disclosure from companies. Troy Paredes As corporations now follow the SEC's strict mandatory disclosure guidelines, the question arises, how much is too much? Troy Paredes, associate professor of law at the Washington University School of Law, says the SEC and companies need to reexamine the mandatory disclosure regulations because investors may be provided too much information, making current disclosure regulation counterproductive. Analysts and investors are inundated with hundreds of pages of documents about individual companies that are intended to assist in investment decision-making. Yet Paredes finds that this "information overload" plays against human nature. "Investing is not easy. At bottom, investing is about evaluating companies and deciding what their securities are worth. Despite all the references in the media, judicial opinions, and scholarly work to a company's 'fundamental value' or 'intrinsic value,' no such figure actually exists. Relatively little attention is paid to how investors process information and make decisions based on the information federal securities laws make available. If investors do not process information effectively, it is not clear what good mandating disclosure does." Paredes notes that due to this information overload, investors may choose investments based on ease rather than the information provided. Recognizing the continuing need for mandatory disclosure from companies, he calls for disclosure documents that are more accessible to investors. "First, there needs to be more empirical data on information overload and its effect on investors. Second, there needs to be a better presentation and formatting of information that facilitates comparison without losing substance. Finally, disclosure requirements need to take into account the psychology of investors." Paredes' full article on this subject will be in an upcoming issue of the Washington University Law Quarterly. This issue will contain a selection of articles from the recent F. Hodge O'Neal Corporate and Securities Law Symposium.
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