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

See all articles by Pankaj M. Madhani

Pankaj M. Madhani

Former Dean (Academics) & Professor

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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

Suggested Citation

Madhani, Pankaj M., Role of Voluntary Disclosure and Transparency in Financial Reporting. Corporate Disclosure: Concepts and Practices, pp. 3-8, Pankaj Madhani, ed., ICFAI University Press, 2008, Available at SSRN: https://ssrn.com/abstract=1578793

Pankaj M. Madhani (Contact Author)

Former Dean (Academics) & Professor ( email )

India

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