The “paradox of regulation”: the overproduction of accounting information

Accounting information has gained utmost importanceover the years, and it now plays a vital role in our society.However, it is sometimes difficult to assess the actual “adequacy”of such produced information, given the clear differences in theneeds and goals of its various users. In this context, twoantithetical schools of thought developed: 1) free-marketapproach; 2) regulatory approach. Notwithstanding none of thesetwo schools of thought seems to absolutely prevail over the otherin the accounting literature, it is possible to state that accountingregulation has become a clear and tangible reality. One of themain arguments underlying the regulatory approach is directlylinked to the view of accounting information as a public good;being it a public good, users are by no means motivated to revealthe actual demand for it, because they know they can takeadvantage of it free of charge. On the other hand, when theproduction of a public good is subject to a specific set of rules, itsnumerous free riders tend to overestimate the demand for it,since they bear no cost whatsoever, thus creating a possible“paradox of regulation.” The overproduction of accountinginformation as a possible paradox of information is the maintheme of this paper.