The Financial Products, Accounting Information Disclosure and Financial Regulatory

Abstract

In 2008, the world has experienced a financial crisis, which emanated from the core of the world's most advanced capital market, and holds back the global real economy in a short time. Financial product especially product innovations, the key thing for Masters of the Universe, play an important role in crisis communication, and had caused wide public concern. July 2009，The Obama administration sent Congress its latest plan to spruce up the much maligned credit rating business in order to increase transparency, tighten oversight and reduce reliance on credit rating agencies. One thing the administration plan wouldn't do is restrict the practice of bond issuers paying for ratings -- a conflict of interest that some observers put at the center of the credit crisis. In This paper, I focus on the analysis of financial products transactions using the principal - agent model (Holmstrom & Milgrom, 1987). Financial transaction or investment poses a classic problem of asymmetric information with latent conflict of interest issues. Based on more information such as capital markets' earnings and stock price information, principal - agent contract could achieve optimal incentives for managers, and overcome harming the principals' benefits that caused by information asymmetry. Accounting information is cost-effective public information with widely concerned. We have noted the change of financial accounting in the financial crisis. But we must take a hard look at the change, accounting information should be helpful for investors not for elite group's aim or purpose to improve their investment performance. July 2009，The Obama administration sent Congress its latest plan to spruce up the much maligned credit rating business in order to increase transparency, tighten oversight and reduce reliance on credit rating agencies. One thing the administration plan wouldn't do is restrict the practice of bond issuers paying for ratings -- a conflict of interest that some observers put at the center of the credit crisis-This electronic document is a live template. The various components of your paper [title, text, heads, etc.] are already defined on the style sheet, as illustrated by the portions given in this document.