Disclosure and Corporate Accountability

requirements rather than direct government intervention. Some commentators, in fact, have suggested that disclosure could be used to eliminate most of the social and economic ills associated with the activities of large, publiclyheld corporations. This essay will investigate disclosure's potential as a universal cure. It will analyze the system within which disclosure - meaning governmental requirements that corporations disseminate information to their shareholders or to the public - has been used in the past and will suggest ways in which changes in disclosure might improve the operation of that system. It also will consider whether disclosure could be used to deal constructively with emerging concerns about corporations' responsiveness to social demands. Before proceeding further, we might highlight an important distinction one that will be discussed at greater length below. It is the distinction between whether corporations are performing well in terms of market efficiency and whether they are performing well in terms of societal expectations. The 1960s and 1970s might well be called the Age of Externalities - a period during which the American public began to attach great importance to many of the social side effects of market transactions. An externality is an effect that the actions of one party has on other parties who are not charged (or compen