This journal analyzes how security laws impact 49 countries in as far as issuance of new equity to the public is concerned. The study was necessitated by the fact that there was always the risk of bad securities being sold to the public by corporate bodies.
The possible risk posed to the public was examined using the security laws that are used in each of the 49 countries when there is an initial public offering. The findings were drawn from the relationships which were derived when these security laws were assessed vis-à-vis stock market development variables.
This study was carried out under the assumption that governments want security markets to be left unregulated; but those issuing securities do dispatch all relevant information so as to attract high prices due to the resulting investor confidence. In this framework, disclosure relates to information regarding profitability and structure of ownership.
Another assumption was that government policy through private stock exchanges could dictate full provision of information through monitoring of trading processes.
This second framework called for the use of an enforcer of securities laws such as a Security and Exchange Commission which monitored trading activities. In these two assumptions, it was held that security laws matter in the existing markets because they could raise contracting costs hence attract interference from external bodies e.g. politicians.
The 49 countries impacted this study since attorneys from each country were used to provide a list of rules and regulations which regulate the giving of securities to the public. The measures of security laws used in this study included liability standards, mandatory disclosure and public enforcement.
Data collection was done through the use of a questionnaire which was filled by attorneys in the 49 participating countries in the study. A practical example of an actual dispute was used to illustrate how markets have been affected by the lack of security laws. The findings of the study concluded that security laws do matter in stock markets just as the hypothesis suggested.