Too much transparency can hurt financial markets
Phys.org
February 25, 2026
AI-Generated Deep Dive Summary
Too much transparency in financial markets can sometimes lead to unintended negative consequences, according to recent research. Michael Sockin, an associate professor of finance at Texas McCombs, conducted a study on corporate bonds and short-term lending, discovering that less transparency may actually result in better economic outcomes. This finding challenges the widely held belief that greater transparency always benefits investors and regulators by enabling better decision-making.
Sockin’s research highlights how excessive transparency can disrupt market stability. By modeling two distinct financial markets—corporate bonds and short-term lending—he demonstrated that too much information can lead to herd behavior or panic, ultimately causing instability. His findings suggest that a balance between transparency and opacity is crucial
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Originally published on Phys.org on 2/25/2026