16 Pages Posted: 22 Jun 2009
Date Written: June 19, 2009
The concept of information transparency in organizations has been commonly and frequently used as an almost all-encompassing concept, without sufficient clarification as to what this compound term means or what it may be comprised of. The premise underlying the issue of transparency is that organizations and managers tend to reveal as little information as they can whereas stakeholders demand higher levels of transparency. This incompatibility of interests, the agency problem, is not sufficiently explored and clarified. Evidently, for example, different stakeholders require different kinds of information, amounts of it or relevant details. Hence, "information transparency" is a concept that remains essentially uncontested by its users, leaving it an opaque concept. The question then arises: how could it be "unpacked" and clarified? We assert that information transparency consists of the following dimensions: relevance, accessibility, revelation and quality. That is, we argue that information transparency is a multidimensional spectrum consisting of the above dimensions. As such, information transparency is a spectrum in a four dimensional space, and we propose an analytical depiction of it. Our purpose is to provide a critical review of the extent to which organizational information ought to be revealed and become transparent to stakeholders. A logical analysis of the concept is used, side by side with anecdotal and case evidence, to illustrate the complexity associated with different levels of transparency of organizational information in ethical dilemmas.
Keywords: asymmetric information, agency problem, information transparency
JEL Classification: G01, G14
Suggested Citation: Suggested Citation
Adam, Avshalom Madhala and Lachman, Ran, The Concept of Information Transparency: A Spectrum in Four-Dimensional Space (June 19, 2009). Available at SSRN: https://ssrn.com/abstract=1422637 or http://dx.doi.org/10.2139/ssrn.1422637