Transparency and Disclosure: Public Company Reporting and Corporate Inputs

Abstract

International capital markets seek to achieve investor confidence through corporate governance mechanisms. Transparency and disclosure is one of the most important aspects of corporate governance which becomes more important every single day as global business applications spread all over the world and information needs of owners, investors, creditors and other interest groups to businesses increase. In the first part of the study a framework for disclosures is provided by classifying public company reports into four main categories which are financial reports, annual reports, securities exchange commission filings and corporate social responsibility reports. Each report category is discussed in light of the attributes of disclosed information, recent regulations, reporting trends and practices. In the second part, the concepts of transparency and full disclosure are studied and analyzed through perspectives of board of directors, members of internal control (audit) committee and external auditing function. Through literature review, we note that having independent members on board and the audit committee seem to be the most important aspect promoting transparency and full disclosure practices. In addition, number of meetings held and financial literacy of the board and audit committee members are questioned and they seem to have some impact on transparency and full disclosure as well. However, having independent outsiders on corporate boards and audit committees seems to be the most important feature of sound corporate governance applications. © Springer-Verlag Berlin Heidelberg 2014. All rights are reserved.