Like many other markets stock markets are characterised by asymmetric information. If investors cannot distinguish highquality from lowquality securities they w... » 

Like many other markets stock markets are characterised by asymmetric information. If investors cannot distinguish highquality from lowquality securities they will value all securities as average resulting in the well known market for lemons. This decreases the allocative efficiency and social welfare by guiding resources to the least good investment opportunities. How can highquality listed companies communicate with stock markets to distinguish themselves from lowquality listed companies? Although proponents of mandatory disclosure rules in securities markets will answer this question with farreaching governmental regulation it is jumping to conclusions and skipping devices that signal the true quality of the investment opportunities to the stock market. This book analyses the functioning of stock markets in particular the dissemination of pricesensitive information on these markets. In order to evaluate the legal rules governing the dissemination of information from an economic perspective an operational framework is needed to assess the current disclosure regulation with respect to allocative efficiency. The book replaces vague legal goals of securities regulation such as investorsrsquo protection by financial economic concepts such as market efficiency and market liquidity. To enhance allocative efficiency the book analyses the relevancy of mandatory disclosure rules the use of trading halts in disseminating information during the opening hours of a stock exchange the use of selective disclosure and the regulation of insider trading.nbsp «