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date: 15 June 2021

(p. xiii) Preface

(p. xiii) Preface

“Transparency” has become a catchword in the economic-political debate in recent years. The reasons are manifold, but a series of big events and broad trends have been instrumental in bringing the role of transparency in business, economics, and politics to public attention. In the business world, for instance, a series of corporate scandals in the early 2000s (Enron, Tyco, WorldCom, Parmalat, Ahold, etc.) triggered a dramatically increased interest in corporate transparency and resulted in the invocation of new corporate governance codes, disclosure rules, or similar regulation, in many countries (e.g. the Sarbanes-Oxley Act in the US and the EU’s Transparency Directive). The series of financial crises in emerging market economies in the mid-1990s (among them the Asian crisis in 1997–98) were to many commentators consequences of opaque corporate structures, weak institutions, and resulting moral hazard problems. Finally, the outbreak of the financial crisis following the Lehman Brothers collapse put the spotlight on the non-transparency of complex financial instruments and risk-taking in large financial institutions, and clearly showed that opaqueness in the financial sector is not just a problem in emerging markets.

Parallel to these events has been a more or less universal trend toward rule-based macroeconomic stabilization policies, which has incited wide concern with the transparency of economic policy, and of the institutions that execute it. The concern has been raised both from the point of view of policy efficiency and from that of democratic accountability. The debate initially primarily targeted monetary policy conducted by politically independent central banks, but has increasingly shifted focus to the transparency of fiscal policy rules and public finances—largely due to the ongoing sovereign debt crisis in several countries.

A host of other factors has contributed to the growing interest in transparency, such as increased international integration of markets for goods and services, leading to increased price transparency both at the retail and intermediary levels and redefinitions of market structure and competition. Cross-border competition now also extends to public policy in the form of regulatory competition, “benchmarking” and establishment of “best practices” in a wide range of policy areas, often with the explicit goal that transparency in combination with “naming and shaming” will engender peer pressure toward ever more efficient and transparent policies. E.g., in the early 2000s, the EU adopted the Open Coordination Method in its Lisbon Strategy for increased competitiveness, thus building on an implicit assumption about a relationship between transparency and economic growth.

(p. xiv) It is not immediately clear from these various but related examples what exactly transparency means, except that it has to do with openness, information, communication, etc. One thing is clear, though: The importance of the concept of transparency has not just increased in the public debate, but has also gained tremendous momentum in economic research during the last one or two decades. One way to illustrate this is to make a word search in the National Bureau of Economic Research (NBER) working papers. Such a search shows that out of approximately 90 papers featuring the word “transparency” in the abstract, about 85% were issued in 2000 or later (and none before 1993), whereas the NBER WP series has been in existence since 1973. It also shows the diversity of research areas in which transparency plays a role, with about 1/3 of the hits in monetary economics, 1/4 in international finance, 10–15% each in general macroeconomics and corporate finance, and the remainder scattered between public economics, international trade, asset pricing, and labor economics.

The increased importance of transparency in economic research and its application within a wide range of different sub-areas of economics have called for a reference work that surveys existing research on transparency, unifies the main “takes” on transparency extant in the literature within a coherent conceptual framework, and presents original research that explores the significance of transparency in different areas within the boundaries of this framework. To that purpose, we have invited prominent scholars from all over the world to contribute 25 high-quality research chapters to the current book which aims to study transparency in three main areas: in economic policy, in the institutional structures surrounding the markets, and in the corporate sector.

The interdisciplinary approach required for a proper analysis of the multidimensional transparency concept and its application makes most traditional scientific journals less well suited as an outlet for the result of such an analysis. This motivates why the results are here presented in the form of a book. The process behind the book was similar to that behind special issues in conventional refereed journals. Following presentation of the main ideas of the project along the lines now appearing in Chapter 1, a number of researcher teams were invited to contribute and to address different parts of the research question. First drafts of the chapters were discussed at a workshop held at the Trolleholm Castle in the south of Sweden in February 2013. Each contribution was refereed by two of the participating contributors to the book in addition to the editors and then discussed at a seminar during the three day meeting where the appointed referees acted as discussant. A second draft of each chapter was discussed at a workshop in Mölle in May, 2013. Also on this occasion, each contribution had two appointed discussants. The final manuscript was then delivered to us at the end of November 2013.

Our biggest gratitude now goes to all the colleagues who have contributed different chapters to the book, and participated in the Trolleholm and Mölle workshops. We are grateful for their efforts and constructive attitudes in working with their own chapters, as well as for reading and commenting on the other contributions. We would also like to thank our colleagues at the School of Economics and Management, Lund University, (p. xv) The Research Institute of Industrial Economics, Stockholm, and other places to which we are affiliated for their contributions and support in various forms.

We also gratefully acknowledge the generous financial support granted by NASDAQ OMX and VINNOVA. In particular, our thanks go to Frank Hatheway and Peter Svensson who were both instrumental in providing the support for the two workshops. The financial support made it possible to bring together scholars from all over the world for productive face-to-face discussions from which the quality of the book has so greatly benefitted. (p. xvi)