Role of Voluntary Disclosure and Transparency in Financial Reporting
Corporate Disclosure: Concepts and Practices, pp. 3-8, Pankaj Madhani, ed., ICFAI University Press, 2008
5 Pages Posted: 2 Apr 2010 Last revised: 31 Mar 2014
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Role of Voluntary Disclosure and Transparency in Financial Reporting
Role of Voluntary Disclosure and Transparency in Financial Reporting
Abstract
Firms gain handsomely from building reputation for transparent reporting, as it eventually results in higher management credibility, a higher Price/Earning (P/E) multiple, increased liquidity and a lower cost of capital. To enhance competitiveness, firms view disclosure as an opportunity rather than a burden. The higher the level of disclosure the lower is the information risk premium. Low risk premium provides higher valuation. This article also highlights risks and costs associated with voluntary disclosure. This article discusses the role of voluntary disclosure and transparency in Financial Reporting. It identifies various characteristics and discusses transparency and benefits of voluntary disclosure.
Keywords: Voluntary Disclosure, Transparency, Financial Reporting
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Role of Voluntary Disclosure and Transparency in Financial Reporting