Reporting and Disclosure

6590 Words Nov 27th, 2012 27 Pages
Chapter 5
Reporting and Disclosure

Discussion Questions

1. Transparent financial reporting means that timely and accurate disclosures are made on all important matters affecting a company’s financial position and performance. It implies openness, communication, and accountability. Transparent financial reporting protects investors because nothing is hidden from them. Investors can better assess the risks of owning securities when information is truthful and complete. Transparent financial reporting also improves market quality. It enhances investor confidence. Open communication creates markets that are fair, orderly, efficient, and free from abuse and misconduct.

2. Four reasons why multinational corporations are
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5. Triple bottom line reporting refers to reporting on a company’s economic, social, and environmental performance. It is a form of social responsibility reporting designed to demonstrate good corporate citizenship. So-called “sustainability” reports are an increasingly popular means of triple bottom line reporting. There is substantial variation in social reporting today. More regulation would improve comparability, but it might also stifle reporting innovations. The usefulness of social reporting to outside parties, particularly investors, needs to be demonstrated before implementing more regulation for it.

6. Often we expect to observe less voluntary disclosure by companies in emerging market countries than by those in developed countries: a. Equity markets are relatively less developed in many emerging market countries, resulting in lower total demand for company information by investors and analysts. b. In many emerging market countries, most financing is supplied by banks and insiders such as family groups. This also leads to less demand for timely, credible public disclosure, and in these markets enhanced disclosure may have limited benefits.

In general, we expect to
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