Disclosure by Politicians

After three years in the making, we have just completed a large research project on the disclosure of conflicts of interest and business dealings by politicians in 175 countries. The resulting paper, Disclosure by Politicians, a joint effort with Rafael La Porta (Dartmouth), Florencio Lopez-de-Silanes (EDHEC Business School) and Andrei Shleifer (Harvard), is the first to look at what disclosures are required by law, which of these are made public, in which countries someone actually checks whether the disclosures are made or not, and what penalties exist in the event of faulty or incomplete disclosures.

The topic will undoubtedly raise heat in countries that don't do well. More relevant for the current crisis, however, one can imagine a call for similar types of disclosures by CEOs of publicly-traded companies and perhaps even privately-held financial companies. The scandals starting to emerge from the crisis - take Madoff and Satyam - suggest there is considerable sleaze in the private sector too.

The good news is that the methodology now exists and can be adapted to the captains of industry.


Posted by Simeon Djankov on February 2, 2009 in Moral hazard | Permalink | TrackBack (0)