Making a Market for Corporate Disclosure

One of the core problems that law seeks to address relates to the inadequate production and sharing of information. The problem manifests itself throughout the law — from the basic contracts, torts, and constitutional law settings through that of food and drug, national security, and intellectual property law. Given that we live in the Information Age, the problem is both disconcertingly under-addressed and eminently addressable at the same time.Perhaps nowhere is the concern more notable than when it comes to the generation and release of valuable information by the public companies that drive the United States economy. This aspect of the problem is evidenced by prominent recent debates on the extent to which firms should be required to disclose information on their political spending since the Supreme Court’s Citizens United decision. Beyond sharing of that valuable information, policymakers have long sought to ameliorate sub-optimally low levels of corporate disclosure to shareholders, regulators, and the public more generally. Their main tool has come in the form of the famous mandatory-disclosure rules of the mid-1930s, as well as the layers added on them over the years. But the disclosure regime has long been critiqued for falling well short of its goals. A number of solutions have been offered, ranging from the radical (dump the regime and its overlays altogether in favor of state-level regulation) to the mundane (adding to the 100-plus-page list of what issuers of securities must disclose). In this Article, however, we offer an innovative approach based on simple regulatory changes to allow market forces to interact in a way that has the potential to better address the problem of information underproduction: amend federal regulations that prevent forces of supply and demand from meeting in a market for early access to corporate disclosures. Thus, we propose a market for corporate disclosure.