During the past several years, the business community has been fascinated by a debate over the functioning of capital markets and the need for market reform. Contributing to the debate are a variety of academics, investors, financial commentators, and government policymakers who, through published reports and research, are challenging the conventional wisdom of market efficiency and laissez-faire economics. Some have focused on the functioning of the capital markets and its effectiveness in resource allocation.1 Others have investigated the related topics of financial reporting regulation and corporate governance.2 Still others are challenging the financial accounting tradition by arguing for new accounting models that use more nonfinancial performance measures to capture the returns to strategic investments in technology infrastructure and core competence.3 The intent of all these reports has been to offer insight into the complex interrelationships among patterns of information flow, capital market efficiency, and the competitive performance of U.S. industrial enterprise.4
It is perhaps not surprising that the studies, reports, and articles have generally created more confusion than clarity. Rather than contributing to a single, shared perspective of market functioning, the studies offer a multitude of theories and definitions of market activity that have served only to aggravate the debate, drawing more distinct political and rhetorical boundaries between supporters and critics.
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