5 THE ITALIAN LAW JOURNAL NO. 1 (2019) Information in the Context of Financial Markets and of Private Placements in Particular by Carlo Emanuele Pupo There is no doubt about the decisive role that information plays in the market system. Markets need a constant flow of information, and that’s why jurists have wondered whether the State should intervene or not in order to satisfy this need. DOI 10.23815/2421-2156.ITALJ ISSN 2421-2156
The debate on mandatory disclosure has actually been one most controversial in the field of financial markets, but it may have come to an end, because now it seems necessary to accept the opinion of those who consider indispensable a binding law.
Also, there is the need for an accurate evaluation of information, since the disclosure mechanism seems to be effective only if the operators are able to fully understand the information, but behavioral finance research shows that investors’ decisions are often marked by moments of irrationality, wich lead them to inefficient choices.
There is currently no way to completely prevent such irrational tendencies, and that’s why research on this issue would seem today to be sufficiently justified if it’s aimed at ascertaining how this background disorder can be takled.
Meanwhile the European Union has been working on Capital Market Union, which is an ambitious project to unite the European capital markets and part of this project is dedicated to information.
EU also wants to innovate the market of private placement, ie the technique of selling financial products without going public and favoring individual negotiations with a limited number of investors. Usually small and low trust companies use private placements, whilst banks show little interest in them, so that the need to limit bank financing constitutes a sufficient reason to attempt to strengthen the private placements.
This way of financing has been increasing over time and its development is really important, also due to the undisputed centrality in the European economic system of small and medium-sized enterprises, but, if we want to achieve this goal, we need a greater harmonization of the markets active in the EU countries.
