Role of Voluntary Disclosure and Transparency in Financial Reporting
CORPORATE FINANCIAL REPORTING - CHANGING SCENARIO, pp. 75-81, D. Alagiri, K. Mallela, eds., 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
Role of Voluntary Disclosure and Transparency in Financial Reporting
Abstract
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. Firms gain 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. This article highlights risks and costs associated with voluntary disclosure. This article discusses the role of voluntary disclosure and transparency in Financial Reporting. It also identifies various characteristics and discusses transparency and benefits of voluntary disclosure.
Keywords: Financial Reporting, Transparency, Voluntary Disclosure
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