Question

FACTORS INFLUENCING THE EXTEND OF DISCLOSURE IN COMPANY

Answer 1

The factors influencing corporate disclosure transparency measure the level of voluntary disclosure in the annual reports and corporate structure.

The extent of disclosure depends on the nature of business of the company, company characteristics variables, corporate governance code, corporate culture and the prevailing regulations. The main factors influencing the extent of disclosures in a company include:

• Nature of business of the company; financial companies including Banks, Brokerage firms, Asset management companies, insurance companies, etc. need to be complying more with the jurisdictional disclosure norms.
• Corporate Governance structure and requirements also play an important role in determining the disclosure extent as per the transparency & compliance model with respect to the requirements of stakeholders.
• Type of company; Public or Private also play a vital role in determining the disclosure requirements of a company – with Public companies more liable for company disclosure aspects. It is logically expected that the status of disclosure would be lower in the other less actively traded companies
• Jurisdiction of the company; regulatory framework of the country and the region also decide the extent of disclosures provided by a company.
• Country risk category; which specifies the requirements as per Global regulatory requirements, such as FATCA, FINCEN, Dodd-Frank Act, EU Regulations, IFRS, US GAAP, etc requirements.
• Stakeholder information requirements.