What works in Security laws (Summary) - Essay Example

What works in Security Laws? affiliation What works in Security Laws? Security laws are clauses and regulations aimed atprotecting shareholders and investors. The significance of security laws is evident in the modern corporate world where shareholders fall victim of poor and invalid public offerings. With many organizations rising to the ability of offering shares, security laws govern the mode in which this is done. The laws dictate the depth of disclosure and the depth at which the public would be involved in corporate affairs.

According to LaPorta, Lopez-de-Silanes & Shleifer (2004) security laws are aimed at protecting both the organization and the shareholders. The author further argues that these laws do not favor any particular party. One significant strategy that the laws apply to ensure equality in public offering is the use of supervisors. Supervisors are agents who ensure the security laws are adhered to. The laws requires of all supervisors not to be biased or influenced by power or any other factor. Another significant content of the security laws is regulating the depth at which shareholders are exposed to company figures.

Every company is required to expose its figures to shareholders before placing their shares at public offerings. However, the depth of knowledge is also regulated in favor of companies. The laws protect companies from exposing all information on the company before its public offering (LaPorta, Lopez-de-Silanes & Shleifer, 2004). From the journal by LaPorta, Lopez-de-Silanes & Shleifer (2004) the need to bridge the gap between countries with strong and weak investor protection strategy is sensitized.

In his recommendation, legal laws and reforms to support financial development are required. ReferenceLaPorta, R., Lopez-de-Silanes, F. & Shleifer, A. (2004). What Works in Securities Laws? The Journal of Finance, 1545