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

See all articles by Pankaj M. Madhani

Pankaj M. Madhani

Former Dean (Academics) & Professor

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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

Suggested Citation

Madhani, Pankaj M., 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, Available at SSRN: https://ssrn.com/abstract=1578792

Pankaj M. Madhani (Contact Author)

Former Dean (Academics) & Professor ( email )

India

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