# Disclosure failure

`kaal:entity:disclosure-failure`

**Status.** derived

This node is assembled mechanically from the 4 claims that carry the concept tag `disclosure-failure`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

4 claims across 1 works, 2010 to 2010.

**2010**

- [1558614-001](https://wulfkaal.github.io/claims/1558614-001) [failure/evidenced] *(failure mode)* -- German banks' exposure to CDO risk ran through credit enhancement and liquidity guarantees given to off balance sheet conduits, and because that exposure was often kept out of their accounting the inherent risk only surfaced once the CDO market collapsed.
  > was often hidden and not included in their accounting. The in- herent risk of the guarantees to the banks, however, became appar- 10 ent when the market for CDOs collapsed.
  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
- [1558614-029](https://wulfkaal.github.io/claims/1558614-029) [failure/evidenced] *(failure mode)* -- 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.
  > 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.
  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
- [1558614-030](https://wulfkaal.github.io/claims/1558614-030) [mechanism/argued] *(failure mode)* -- The more a country leads in financial innovation, the more exposed its disclosure regime is to misrepresentation and fraud, which makes the U.S. regime more vulnerable than Germany's despite being formally stricter.
  > to the extent financial innovation in the United States is ahead of that in Germany, the U.S. disclosure regime may be more vulnerable to misrepresentation and fraud
  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
- [1558614-034](https://wulfkaal.github.io/claims/1558614-034) [failure/argued] *(failure mode)* -- The U.S. approach left both of its risk controls ineffective: the securities disclosure regime failed to prevent the 2008 financial crisis, while the expansive business judgment rule that permitted the risk taking in the first place survived the crisis unchanged.
  > The much-touted U.S. securities disclosure regime failed to prevent the 2008 financial crisis, yet the expansive U.S. version of the business judgment rule in cor- porate law that allowed the risk taking to begin with has remained in- tact.
  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

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/disclosure-failure.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.