Disclosure, The Knell Of Insider Trading: An Analysis Of Theoretical Justifications For Disclosure Regulations In Capital Markets
- IJLLR Journal
- Jan 20
- 1 min read
Siddharth Gokhale, Jindal Global Law School, O.P. Jindal Global University
ABSTRACT
The Agency Problem, often termed a conflict of interest, underlies many global conflicts. Conventional scholarship attributes this issue not only to a divergence between the interests of the principal and the agent but also to factors such as informational asymmetry—where the agent typically possesses more information than the principal. This imbalance can lead to outcomes that the principal deems undesirable. In India, corporate and financial law seeks to address this challenge by aiming to minimize informational asymmetry through disclosure-mandating regulations. This paper evaluates the effectiveness of these widely praised regulations in mitigating informational asymmetry and reducing the agency problem. The analysis begins by explaining the fundamentals of the agency problem and the role of disclosure as a potential solution. It then examines the application of these concepts in the secondary capital market, concluding that disclosure regulations may not be as effective as originally believed. Finally, the paper explores alternative solutions that could complement or replace existing approaches to better address the issue.
Keywords: Agency Problem, Insider Trading, Informational Asymmetry, Disclosure
