Importance of Full Disclosure in Financial Decision Making
Running head: THE IMPORTANCE OF FULL DISCLOSURE 1
The Importance of Full Disclosure and Financial Reporting for Informed Financial Decision Making
The Importance of Full Disclosure and Financial Reporting for Informed Financial Decision Making
Financial reporting and full disclosure are vital elements for investors and other interested parties who would like detailed information about a particular firm. This information gives a vivid picture of an organizations performance as well as their future financial goals. Many organizations report this information to establish trust and confidence with their current and potential stockholders and stakeholders. Financial reporting is an important and vital part of good corporate governance (Gaa, 2009). Without full disclosure, interested parties are unable to make informed business decisions.
Financial reporting and full disclosure ensures that the firm will provide necessary information to stakeholders/stockholders who have a vested interest in the firm’s performance. This communication of information establishes a trusting relationship with stakeholders, and adds value to the overall firm. Corporations must implement some type of strategy that will enable monitoring of financial reporting because of the possibility that someone within the company may have an interest in altering or changing financial information for their personal gain, or for the personal gain of an outside party. The main concern of firms is the possible revealing of all information, but the only information necessary is the information that can possibly affect the decision of an investor or other interested parties (Kranacher, 2011). There are several stakeholders and stockholders who utilize this information to capture how well a company is performing, and this financial information gives informative data that allows outside parties the opportunity to make an informed
The Importance of Full Disclosure and Financial Reporting for Informed Financial Decision Making
The Importance of Full Disclosure and Financial Reporting for Informed Financial Decision Making
Financial reporting and full disclosure are vital elements for investors and other interested parties who would like detailed information about a particular firm. This information gives a vivid picture of an organizations performance as well as their future financial goals. Many organizations report this information to establish trust and confidence with their current and potential stockholders and stakeholders. Financial reporting is an important and vital part of good corporate governance (Gaa, 2009). Without full disclosure, interested parties are unable to make informed business decisions.
Financial reporting and full disclosure ensures that the firm will provide necessary information to stakeholders/stockholders who have a vested interest in the firm’s performance. This communication of information establishes a trusting relationship with stakeholders, and adds value to the overall firm. Corporations must implement some type of strategy that will enable monitoring of financial reporting because of the possibility that someone within the company may have an interest in altering or changing financial information for their personal gain, or for the personal gain of an outside party. The main concern of firms is the possible revealing of all information, but the only information necessary is the information that can possibly affect the decision of an investor or other interested parties (Kranacher, 2011). There are several stakeholders and stockholders who utilize this information to capture how well a company is performing, and this financial information gives informative data that allows outside parties the opportunity to make an informed
References: Gaa, J. C. (2009). Corporate governance and the responsibility of the board of directors for strategic financial reporting. Journal of Business Ethics: Supplement (90), 179-197. Hollein, M. (2010). Fighting financial reporting fraud: a team effort. Financial Executive , 26 (9), 6. Kranacher, M. (2011). Full disclosure: all investors need to know. The CPA Journal , 81 (4), 80. Strischek, D. (2010). What you need to know about fraudulent financial reporting. The RMA Journal , 93 (2), 68-71, 11. Tapscott, D. W. (2011). The age of transparency. Financial Executive , 27 (4), 34-40.