eSignature Legitimacy for Business Ethics and Conduct Disclosure Statement in India

How to eSign a document: eSignature legitimacy for Business Ethics and Conduct Disclosure Statement in India

this week we're thinking about the disclosures that firms are both required to make and also those that they choose to make it is important for us to consider these disclosures as it helps us determine the extent to which Current financial statement performance is likely to continue the accounting rules typically require firms to provide additional information when they Lodge their financial statements these include the notes to the financial statements which provide details on specific items found in the main financial statements for example firms are required to disclose information about their different operating segments so that users of the financial statements are in a better position to evaluate how different parts of a business are performing BHP discloses results by petroleum copper iron ore and coal JB Hi-Fi reports information for the following segments JB Hi-Fi Australia JB Hi-Fi New Zealand and the good guys other disclosures include information about executive pay as well as general discussion of their results which is typically found in the management discussion and Analysis section of the annual report some disclosures are required by the relevant corporations legislation and others are required by Stock Exchange listing rules in Australia the stock exchange requires listed firms to immediately disclose to the market any information that would likely affect the share price this is part of what's known as The Continuous disclosure regime anything required by the rules or regulations is what we call mandatory disclosure of course organizations can choose to provide more information than the minimum required this is typically called voluntary disclosure firms will often provide additional disclosures to compensate for limitations in the mandatory accounting rules many managers believe that the accounting rules do not allow them to do a good job of communicating the underlying economic performance of their businesses non-gaap or pro-form earnings have been increasing in their frequency over time these are performance measures that are not produced in ance with the accounting rules the adjustments made in non-gaap earnings are not always income increasing in my research on the use of non-gaap earnings in Australia we found that Pro former figure was higher than the corresponding Gap metric only about 60 percent of the time which is much lower level than we're expecting other researchers found that on average non-gaap earnings are informative rather than misleading from an investor perspective that is the stock returns for a company correspond more closely to the non-gaap earnings than the Gap earnings managers often include an articulation of the company's long-term strategy a specification of non-financial leading indicators that are useful in judging the effectiveness of the strategy implementation and forecasts of future performance there has been much recent interest in the ESG information that firms provide especially that relating to sustainability or climate related information and it seems that this trend is likely to continue one of the issues that we highlight in the unit is the difficulty that firms have in determining which metrics to measure and which rules to follow hopefully we will continue to see consolidation in the number of bodies putting out rules on the disclosure of sustainability related issues voluntary disclosure can also include forward-looking statements about either Financial or non-financial measures this would include things like managers providing earnings forecast these are often called earnings guidance however there has been a pushback against the incentives that quarterly earnings guidance and quarterly reporting have on management it's often claimed that it forces managers to focus too much on the short term at the expense of long-term value creation you'll see an additional video addressing some of these issues that researchers investigated firms are often willing to provide additional information if investors don't have the same information set as management they will probably find it difficult to Value new and Innovative Investments if investors are uncertain about the future prospects of a firm it's rational for them to take a conservative view which would lead to a firm being undervalued one constraint in providing more information is the competitive dynamic in product markets disclosure of proprietary information on strategies and their expected Economic Consequences may hurt the firm's competitive position managers then face a trade-off between providing information that is useful to investors in assessing the firm's economic performance and withholding information to maximize the firm's product Market advantage your role as an analyst is to assess the information that the firm provides and how well it helps explain the existing strategy keep in mind that you'll be wanting to use all of the sorts of information to assist you when you are coming up with your forecast of future financial performance