A substantial number of regulatory frameworks are commonly viewed by impartial observers as inordinately complex. Is there an explanation for this phenomenon? Employing a partial equilibrium model, this paper approaches the problem of complexity from a political-economy vantage point. It...

Because of imperfections in auditing technology, firms can successfully misrepresent financial reports. We offer a new mechanism, a "sunshine rule," by which firms are required to publicize a management draft prior to the audited reports. If the final reports are materially different from the...