From Fair Value to NFTs: Essays on Transparency and Regulation in Financial Markets

Fritz Günther Lattermann

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: This dissertation addresses the complex relationship between transparency, financial statements, and regulatory oversight in the global financial landscape. Four chapters explore different facets of this complex interaction. Chapter 2 analyzes the legislative process of the Financial Market Integrity Strengthening Act, focusing on the restructuring of the enforcement framework. The analysis shows that the legislator only incorporated the professionals' recommendations to a limited extent into the final legislation, and that the law appears to place the main responsibility for the failures in the Wirecard case on the FREP even before the conclusion of the legal proceedings. Chapter 3 examines the impact of enforcement costs on voluntary delisting and downlisting decisions in Germany, thus contributing to the discourse on the trade-off between listing incentives and costs. The results suggest that an error announcement itself is not a driving factor. Rather, the analysis points to the enforcement process itself as a significant financial burden for firms. Chapter 4 focuses on fair value adjustments on investment property and its characteristics as a recurring income that has at the same time non-recurring characteristics. The results indicate limited positive reactions to positive earnings surprises when fair value adjustments materially affect reported earnings. This suggests that fair value adjustments, having characteristics of non-recurring earnings, are viewed by investors with heightened uncertainty and perceived risk due to their uncertain translation into future cash flows, while such uncertainty is reduced in transparent real estate markets. The final chapter shifts to the NFT market, which operates in an unregulated but transparent environment. The analysis suggests that experienced investors outperform, indicating a degree of information inefficiency. Moreover, traders with more transactions may benefit more from pump-and-dump schemes, highlighting the need for a regulatory framework despite theoretical transparency.

Date: 2024-04-26
New Economics Papers: this item is included in nep-pay
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