The Importance Of Corporate Reporting

2.4. Conclusions: more than corporate reporting

2.4.1. Corporate transparency: a new corporate style

Summing up, corporate transparency is a recent trend which is quickly growing worldwide during the last recent decades. Its has its roots in big multinational companies practice of publishing different reports to publicly disclose information about their operations, their financial statements, their impacts on environment and so forth.

The forces that drive and foster the expansion of this trend are various and encompass both social and economic variables showing that transparency is something more than a mere corporate trend. The tendency to act transparently, to pursue ethical goals and to be above suspicion is a common feature of 2000s

2.4.2. The increasing control of stakeholders

The constant rise of corporate transparency certifies the strategic importance of stakeholders in corporate dynamics.

If years ago the interests which firms wanted to satisfy were those of shareholders, in the current society companies have to deal with the objectives and the desires of a broader group of people called stakeholders. This category encompasses all the subjects (both persons and organizations) which have interests in the way a company acts.

Governments through laws, journalists through reportages, people through purchase decisions or boycott actions: all these are example of how subjects which are not the owners of a firm can influence, and in some cases force, companies to undertake some desirable actions like publishing corporate reports or adopting a more sustainable business model.

This implies a fundamental shift in companies’ management since shareholders are currently understanding that, in order to pursue their ultimate goal (that consists in increasing their own dividends), they have to enlarge the content of corporate objectives including stakeholders

The increasing importance of companies’ image and reputation

Corporate transparency led to the growth of the importance of a further element: corporate reputation since the more a company is transparent, the less it can be perceived as “unethical” and “dishonest”.

As a matter of fact, corporate reports can be used as tools that promote some virtues of a company while firms that do not use them result opaque and can ruin their image because of undesirable hidden practices.

By voluntarily publishing relevant info about some internal dynamics, companies take on responsibility and accountability of externalities that they could otherwise ignore. Moreover, a transparent company does not have to fear moral judgment and critics because transparency appears to be a deterrent not only to misbehaviors but also to public shames.

In a context where costumers appear to be experienced and able to select tons of info about the goods they want to purchase, scandals about info and side effects hidden by companies have strongly impacted on companies image, ruining it and leading to a drop of companies performances. This implies a crucial role for corporate reputation in business