Читать книгу Corporate Governance - Quantity Versus Quality - Middle Eastern Perspective - Saleh Hussain - Страница 29

For transparency and disclosure of information to have value and quality, clarity of the purpose of disclosure is a must. Information and data disclosed need to be clear, complete, accurate and timely. Investors, the press, shareholders, stakeholders and the public at large need to come to decisions based on disclosed information. Therefore the quality and accuracy become crucial. We look at some of the issues relating to disclosure and how they relate to good governance practices.

•What to disclose is the first question to ask, and Why is the second. Responses to these two questions help to establish the information the corporate needs to disclose and for what purpose.

•Periodical and corporate annual reports give various information and data: lists of shareholders, board members, names of executive management, financial highlights including balance sheet, cash flows and profit and loss account, operational reports for the year ended and the external auditor's report. These are mostly quantitative disclosures that deal with past periods. They are history that is dead and provide very little benefit to readers to base meaningful qualitative decisions. In particular, decisions to invest in the stock of the reporting company or even to enter into new business with it are not addressed. What would make the information disclosed of value is the amount of information about the future plans of the company. Major changes in the future direction, i.e. entering new markets and re-organizational plans would give more meaningful tools for the public to make well-informed decisions to deal with the disclosing company.

•The annual reports talk about the work of the board and its committees. They do so inadequately and again only about the past. They give vague, general remarks about the operation of the board but very little about the actual process of such operations. For example, the reports fail to give the number of meetings the board and its committees held during the previous year, the percentage of attendance of the directors at those meetings and changes during the year in the composition of the board, i.e. resignations and new memberships. This is quality information that should be included in the reports. Such information will give the reader solid information on the governance practices within the company, thus providing the necessary guidance to make better decisions.

•Another piece of important information that is absent in most corporate annual reports is the "Statement of Compliance with Corporate Governance Requirements". The regulators in some countries make such a statement mandatory and call for its inclusion in annual reports. The statement is signed by the Chairman of the board and the Chief Executive Officer of the corporate. The statement normally lists the corporate governance practices that the company complied with during the past year and any plans for future governance enhancements.

•The related-party material holding in the company and large business transactions between the company and its related parties receive very little disclosure coverage. Only a minimum amount of detail is given making it difficult for interested parties to make quality decisions about future business deals with the company.