# kaal:claim:1558614-029

**Claim.** Routine engagement in highly complex transactions lets public companies conceal risky transactions from investors and even from their own directors, which is a structural weakness in the supposedly rigorous U.S. disclosure regime.

**Type.** failure  **Support.** evidenced

**Holds when.**

- companies whose ordinary business consists of highly complex transactions

**Source quote.**

> Public companies that engage in highly complex transactions as a matter of course can easily conceal risky transactions from investors. Indeed, management can also conceal these transactions from the company's own direc- 160 tors.

**From.** Painter and Kaal, *Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in* (2010), IV.C. Securities Disclosure, page 38

**Cite as.** Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

**Verify.** sha256 of source PDF `e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Painter%20and%20Kaal%20-%202010%20-%20Initial%20Reflections%20on%20an%20Evolving%20Standard%20Constraints%20on%20Risk%20Taking%20by%20Directors%20and%20Officers%20in.pdf

**Failure mode.** complexity defeats disclosure  (family: disclosure-ineffectiveness)

**Topics.** disclosure, corporate-governance

**Keywords.** disclosure-failure, complexity, lehman-brothers, repo-105, board-information

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