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Discuss how would a society decide the optimal level

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Financial reporting standards are meant to prevent capital markets from breaking down due to less-informed investors withdrawing from the market because they consistently lose out to better-informed investors. That is, financial reporting standards are meant to make capital markets more informationally efficient. However, fully informationally efficient capital markets will breakdown due to lack of incentives to gain an informational advantage and invest.

Problem 1: Accordingly, discuss how would a society decide the optimal level of informational efficiency? Is this a technical or a political problem?

Reference no: EM132751193

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