Business law 1 part 7 Flashcards
(17 cards)
What opportunities do securities markets provide for companies?
Attract outside investors
Companies can offer various types of investments, including shares, bonds, and hybrid securities.
What are the three key stages governed by securities law?
IPO, trading, going private
What is the purpose of information disclosure in securities law?
Ensures access to the same information for everyone
How does information disclosure reduce risk for investors?
Reduces the gap between inside knowledge and outside investors
What are the benefits of information disclosure in securities markets?
- Enables informed decisions
- Reduces speculation risk
- Improves market liquidity
- Enhances resource allocation efficiency
What is disclosure in the context of securities?
The process of providing accurate and complete information to investors
What is required for continuous disclosure in the secondary market?
Relevant information by issuers
What issue does mandatory disclosure requirements address?
Directors may hide negative information or share selectively
What is the purpose of standardizing and comparing information across companies?
Reduce misleading or incomplete information
What are some mandatory documents corporations need to provide?
- Prospectus
- Quarterly reports
- Disclosure of potential conflicts of interest
- Market impact information
What varies based on transactions, companies, and investor experience?
Disclosure requirements
What is a risk associated with the fair market value approach in accounting?
Over-evaluation
What regulatory strategies are used to minimize fraudulent activities?
- Quality control measures
- Corporate governance
- Monitoring by public authorities
What is the role of gatekeepers like audit firms and investment banks?
Monitor issuers and can be sued for negligence
What is a characteristic of enforcement in the US regarding securities law?
Strong public enforcement
True or False: Quarterly reports are mandatory in the EU.
False
Fill in the blank: The shift towards _______ in the EU aligns with IFRS and GAAP.
fair market value
