After the initial frenzy of investment spending to take advantage of the new opportunities, the industries sometimes become overcrowded, or at least profitability is significantly diminished for a while, resulting in failures of many firms and a retrenchment in investment. Several examples of important innovations provide some concrete illustrations of this adjustment to 2 higher productivity growth.
Lenders and investors have an obvious interest in meaningfully assessing a firm's risk-management performance, underlying trends, cash flow, and income-producing potential. In this regard, transparency is essential to providing market participants with the information they need to effect market discipline. Sound, well-managed companies can benefit if enhanced disclosure enables them to obtain funds at risk premiums that more accurately reflect their lower risk profiles.