Senior Research Fellow Jerry Brito and Andrew Perraut discuss the importance of mandatory transparency to improve performance in the public
The legal literature on transparency is generally divided into two categories: the study of transparency as a solution to political corruption and scholarship looking at transparency in the context of corporate disclosure requirements. The former is concerned with preventing government malfeasance that can lead to serious societal problems, especially in the developing world. The latter focuses on the disclosure of corporate performance to fully inform markets. However, these two insights on transparency never meet. In this article, we hope to show that just as mandatory transparency can improve corporate performance, it may help improve government performance as well.
Part I of this article defines transparency and shows how it relates to performance accountability. Part II explores how transparency can result in improved performance and looks at the lessons government can draw from corporate financial transparency. Finally, part III examines some limits to transparency, including exceptions that swallow the rule and public choice concerns.