3 The investment industry
Failure of the present role of capital markets and financial reporting
Rules for financial reporting may or may not have worked before the pandemic of 2020. Our feeling is that they have failed. They exist, and they perform a function, but that function has changed. Post-pandemic, it is likely that they will change again. So this chapter deals with what we had and where we might be going. So possible functions that were important in the past but may be less relevant in the present circumstances (as mentioned earlier) include:
- Resource allocation: The classical function of financial reporting was to channel funds to the most productive business firms – for example, to facilitate the financing of new enterprises. ...
