In short, managers have better firm-specific information than directors, shareholders and other stakeholders, and don’t necessarily have an incentive to fully report information that may be detrimental to their self-interests, or the interests of the institution as a whole. Therefore both board directors and external stakeholders demand information from a firm’s managers so they can carry out their respective monitoring roles.
None of these benefits show up very clearly in GDP statistics, but all of them have made a big, and a beneficial, impact on our lives. Few of us would want to lose them. But what about economic growth? Surely growth in GDP has been disappointingly slow since 1984, and this proves beyond reasonable doubt that the reforms have failed?