We have been conducting research and advising companies on reporting for many years – here are a few frequently asked questions. We are happy to help with any other queries you might have, call us or email: email@example.com
- Is revealing more information commercial suicide?
If investors are left guessing about the quality of a company’s performance, the lower its stock valuation. Management doesn't have to give away any trade secrets, but we would encourage them to provide investors with sufficient information to enable an informed assessment of a company’s activities.
- Is there any economic benefit to transparency?
Intuitively, you would expect to see a relationship between greater transparency and lower capital costs; the less an investor has to guess about the underlying performance of a business, the higher will be the value placed on a company. Reassuringly, intuition is supported by empirical evidence.
- Should different companies report different types of information?
Regulators have become very comfortable with the one-size-fits-all model of reporting, which is a major problem in today’s capital markets. We believe that industry-focused reporting models that reflect an industry’s specific value drivers are likely to emerge.
- Are we talking about providing more information? Isn’t everyone already overwhelmed with too much information?
While there may be an overload of financial information, there is clearly a need for more and better non-financial information. Transparent reporting is not about reporting more information. Rather, it's about reporting better, more integrated information that communicates a company’s true value to investors and analysts.
- Why would we want to lead the way in terms of transparent reporting?
Because it is a first move competitive advantage – the investment community generally puts pressure on other companies to follow suit. If you agree that industry reporting models are likely to emerge and then lead to new standards for non-financial metrics, shouldn’t you try to influence change before it is imposed?