IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-0-230-51886-5_11.html
   My bibliography  Save this book chapter

How to Restore Trust in Financial Markets?

In: Enron and World Finance

Author

Listed:
  • Hans J. Blommestein

Abstract

Without trust, financial markets cannot function efficiently. Trust and integrity depend to an important degree on the reputation of financial markets to generate reliable valuations of companies and business ventures. This perspective makes clear why the integrity of the gatekeepers of the public trust to vouch for accurate and reliable information about public companies is at the heart of the proper functioning of financial markets. And since the ‘garbage in, garbage out’ principle also prevails in financial markets, public trust in the functioning of financial markets has declined as a result of major financial reporting scandals involving Enron, Tyco, WorldCom, Parmalat and others. Also, massive overvaluations of equity that occurred in the second half of the 1990s and in the early 2000s have been singled out as being caused by misinformation and manipulation of financial results (Jensen, 2002). More generally, when information about the operation of public companies is false, misleading or opaque, trust in financial markets is likely to be affected adversely. This gives financial market participants a stake in the disclosure of timely and meaningful information, including by assuring that the quality of financial reporting by public companies is as high as possible. And this in turn puts the spotlight on the role of the gatekeepers of the public trust, in particular accounting firms, banks, rating agencies, supervisors and regulators.

Suggested Citation

  • Hans J. Blommestein, 2006. "How to Restore Trust in Financial Markets?," Palgrave Macmillan Books, in: Paul H. Dembinski & Carole Lager & Andrew Cornford & Jean-Michel Bonvin (ed.), Enron and World Finance, chapter 11, pages 180-190, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-51886-5_11
    DOI: 10.1057/9780230518865_11
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Volker Lingnau & Florian Fuchs & Till E. Dehne-Niemann, 2017. "The influence of psychopathic traits on the acceptance of white-collar crime: do corporate psychopaths cook the books and misuse the news?," Journal of Business Economics, Springer, vol. 87(9), pages 1193-1227, December.
    2. Suriyanrattakorn, Savinee, 2023. "Does Trustworthiness Matter for the Actual Lending-Deposit Spread and Perceived Financial Service Affordability?," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 30(2), July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-0-230-51886-5_11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.