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Sarbanes-Oxley News & Developments
Public Companies Get C-Plus for DisclosureQuality of financial and corporate disclosures receive same grade as in 1999.
> > So much for Sarbanes-Oxley. At least that is how many investment professionals seem to feel about the landmark act, and about other governance initiatives that were intended to improve disclosure and transparency at public companies.
In a survey of the Association for Investment Management and Research, public companies received an average grade of C-plus for the quality of their financial and corporate disclosure. That is the same grade they received in 1999.
For the quality of financial reporting, only 1% of respondents gave public companies an A, 44% awarded a B, compared to 5% and 56%, respectively, in 1999. This year, 2% gave companies an F, none gave that grade in the prior survey. Worldwide, 10% of participants from this year said the quality of information disclosed by companies they followed had deteriorated in the past three years.
Survey respondents seemed unhappy with companies statements of cashflow and shareholders equity; 13% gave these an F. Other areas in which they perceived large gaps between the importance of financial information and quality of the disclosure included off-balance-sheet assets and liabilities; extraordinary, unusual, and non-recurring charges; and pensions and other retirement benefits.
And what corporate executives are the source of the most important, highest-quality communications? Survey chose the CFO, the controller, the treasurer, or an equivalent high-ranking finance officer, ahead of the CEO, president, or an equivalent executive. Seems that finance pros prefer to hear the news from a finance pro.
Source: CFO
Published:2003-10-29
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