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Here’s a counter example: going public. The SEC does a deep probe, one that has material teeth, and “yes” isn’t a conclusion. Surely the SEC is subject to thes

Here’s a counter example: going public. The SEC does a deep probe, one that has material teeth, and “yes” isn’t a conclusion. Surely the SEC is subject to these forces? Another example is merger approval, along antitrust and other regulations. This is a very deep process, clearly with a lot of extremely powerful money on the line. Or another, tax collection. Fact is there’s actually a lot of examples of effective controls on business, especially when financial crimes or malfeasance are the target. The laws are particularly sharp in the finance world compared to say, food safety or other regulatory areas that are clearly captured.

cjbgkagh 4y ago
The laws are only sharp in the finance world because it is more profitable for it to be that way which I think prevents it from being a counter example. Take for example the Positive Accounting Theory of Watts and Zimmerman which seeks to explain actual accounting practices as opposed to academic accounting practices. One of their findings was that due to the costly signaling nature of audits some companies will do more extensive audits than would otherwise be standard or even optimal. There is value in trust and that value can be captured in the form of decreased cost of debt from lenders and an increase in stock price. Without trust the whole financial industry implodes and that would be bad for just about everyone in finance and especially bad for those making the most money from it.