The proponents of neoclassical, marginal economics (see Chapter 4) main¬ tain that mandatory accounting and auditing standards inhibit contracting arrangements and the ability to report on company operations. Opponents of this view argue that market forces alone cannot be relied on to produce the high-quality information required by society.

Required:

Present arguments support both viewpoints. What is your opinion? [Hint: You may wish to consult Richard Leftwich. "Market Failure Fallacies and Accounting Information," Journal of Accounting and Economics (December 1980), pp. 193-221; Steven Johnson. "A Perspective on Solomon's Quest for Credibility in Financial Reporting," Journal of Accounting and Public Policy (1988),