Case 2. (5 points) Finn Johansson is a stock picker responsible for recommending Mexicans securities for his brokerage firm's clients. He is often frustrated about the lack of credible information on companies in Mexico. "Everything is always so top secret," he says. "Any time I try to learn about a company's activities, all I hear is 'I wouldn't know what to tell you'." In Mexico, it seems, information is power. Trivial or not, information seems to be off-limits to anyone who is not an insider. Finn knows that this secretiveness goes way back in Mexico's history. The Aztec rulers kept their subjects amazed by powerful deities who were both unpredictable and hard to understand. The Spanish followed many detailed bureaucratic rules but hardly ever shared them with ordinary Mexicans. After independence, the ruling political parties made sure that compromising information never got in the wrong hands. Historian and novelist Hector Aguilar Camin has written, "In Mexico, powerful people have traditionally kidnapped information. Part of the process of democratization is freeing it." But there is still a tendency to want to hold it hostage for some kind of benefit." Most economists believe that government secrecy made the 1994 currency collapse more severe because the Mexican government withheld vital macroeconomic statistics from the international banking community. Many worry now that secrecy will limit Mexico's economic growth. Yet pressure for transparency has grown along with an influx of foreign investors doing business in Mexico. The rise of opposition political parties and the growth of a free press have fueled a new debate over access to information. "What good are all of these trends to me?" complains Finn. "I need better information now." Required: Your response should be based on a review of the material presented in this chapter, in addition to the case information above. 1. Discuss at least five characteristics that predict relatively low disclosure levels in Mexico. (Hint: this answer related to Chapter 2, 4 and 5, example source of finance) 2. Discuss characteristics or features that predict relatively high levels of disclosure in Mexico. 3. Accounting measurement and disclosure practices are improving (from an investor- protection viewpoint) in many emerging market economies. What are some of the recent improvements in these areas in Mexico? Discuss the underlying factors that help explain why the improvements are occurring. Again, refer to the material presented in this chapters in addition to the case information above