It is sometimes baffling that US with all its high financial disclosure standards still ended up with failed companies like Enron and WorldCom. Even with Sarbanes Oxley, Lehman still failed. Is it a failure of regulation or failure of inadequate disclosure? Perhaps it is in searching for these answers that world powers are overhauling their financial regulations and inevitably rolling out new financial disclosure standards. Following the massive crisis in the international financial markets there has been an increased call by both the regulatory bodies, national governments and the general public for increased financial disclosure in the financial statements of especially quoted companies. Continue reading
What is Financial Transparency?
The US SEC defines financial transparency as the timely, meaningful and reliable disclosures about a company’s financial performance. Transparency is about telling the complete story of an organization as seen through the eyes of management. It involves the use of nonfinancial indicators of current and future performance, risks, and other factors necessary to help investors and other interested parties to better understand the business.
When a company is focused on financial transparency, the firm goes beyond the financial figures contained in the financials statement to tell the story behind those figures. In transparent reporting model, management is expected to evolve a reporting model that includes material information about the firm’s growth strategy, people issues, brand and market share, and supply chain issues, supported by quantitative nonfinancial performance measures and operating metrics like manufacturing capacity, employee turnover, units sold among others as it pertains to the industry the firm operates. In addition, transparency includes improving access to, timeliness of, and relevance of information that is useful to stakeholders.
Transparency is important as it goes above generally accepted accounting principles, Governmental Accounting Standards Board, or statutory reporting requirements, where and when needed, to provide users with the information they need to make informed decisions about an organization. It entails not only financial information but also nonfinancial information accompanying, by either law or custom, the audited financial statements.
Transparency is often easy when things are going well. But companies facing problems often have a tendency to hoard financial information. The preferred game is “no surprises. Disclose all material information as precisely and plainly as possible. EmploymentLawGroup believes that transparency helps to prevent the corruption that inevitably occurs when a select few have access to important information, allowing them to use it for personal gain. Improved transparency can also lead to less price volatility in the stock market because all the market participants can base decisions of value on the same data.
Transparency is one of the silent prerequisites of any free and efficient market, as transparency is generally rewarded through the stock’s performance.
Regulatory enforcement of financial transparency is however quite challenging. Hence, in developed economics, private initiatives have created market based incentives to encourage managements to adopt higher levels of financial transparency in their financial reporting. The Source Capital and BusinessDAY Financial Transparency Ranking Awards (FTRA) is to test transparency in the published financial statements of Nigerian quoted companies and is Nigeria’s first private sector initiative in that direction.
A corporate whistleblower’s daily life lends dimension to the fact-based Silkwood
By Mike D’Angelo for www.avclub.com.
Silkwood (1983)
“On November 13, 1974, Karen Silkwood, an employee of a nuclear facility, left to meet with a reporter from the New York Times,” the tagline informs us. “She never got there.” Meanwhile, the poster image depicts one of the last moments of her life, showing her glancing in alarm at her rearview mirror as the headlights of a car behind her loom menacingly from the darkness. Nobody has ever been able to prove that Silkwood was murdered, but 1983’s Silkwood, directed by Mike Nichols from a script penned by Nora Ephron and Alice Arlen, strongly suggests that she paid the ultimate price for her decision to rat on her employer, Kerr-McGee (acquired and dissolved in 2006 by Anadarko Petroleum). Convinced that she and her fellow workers were being wantonly endangered by the company in an effort to cut costs, Silkwood, a union rep, amassed evidence of defective fuel rods and falsified inspection reports—evidence that she reportedly had with her when she got in the car, but which wasn’t found at the scene of the accident.
All of this suggests a taut industrial thriller, and Silkwood delivers on that score to a moderate extent (though it’s hampered by the fact that nobody really knows what happened). What makes the film truly memorable, however, isn’t its protagonist’s noble crusade so much as the mundane details of her daily life, as shared with her oft-frustrated boyfriend (Kurt Russell), her lesbian roommate (Cher, in the role that briefly established her as a serious actress), and a slew of credibly working-class coworkers. Meryl Streep, who had just won a second Oscar for Sophie’s Choice, turns in one of her earthiest, least affected performances, making Karen Silkwood a prickly personality much too complex for simple martyrdom. And the script, deftly realized by Nichols with a great deal of attention to cramped interiors and dusty exteriors, gives arguments about visitation rights (her ex-husband has custody of their three kids) equal weight with panicky depictions of plutonium contamination. It’s the rare movie about a whistleblower that acknowledges one doesn’t constantly have the whistle in one’s mouth.