Headlines 2015

Optimum transparency – a dream or reality?

2015-04-23

Lars Oxelheim, IFN and Lund University, talks about optimal transparency, which takes into account both macroeconomic environment and a cost analysis.

Transparency and the difference between accurate and more information in corporate communications, was the subject of a half-day conference organized by the FAR, IFN, Nasdaq and Transparency International Sweden. Professor Sidney Grey, co-author of the book Oxford Handbook of Economic and Institutional Transparency, was a speaker at the event. In the final panel discussion, the participants agreed that the current scope of corporate information should not increase but should focus more on societal development.

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Professor Sidney Grey, University of Sydney, Australia.

 

Sidney Grey explained that the international accounting standard IFRS is not well suited for small- and medium-sized businesses. For SME this regulatory framework is ”too much and too costly". Grey argued that globalization is overrated. In reality, he said, it's mostly about regionalization. He further explained that local cultures have not kept pace with the internationalization and, thus, created a number of discrepancies.

The participation fee for the event included a copy of the Oxford Handbook of Economic and Institutional Transparency (New York: Oxford University Press, 2015). Lars Oxelheim, one of the book's editors, spoke at the conference in Stockholm about "Transparency – an opportunity to understand the earnings sustainability". He explained that the optimal transparency, i.e. not too little or too much information, varies from industry to industry and from area to area. In the equation of what optimal transparency entails, a cost-benefit analysis of the information that recipients need to receive is essential, in addition to taking into account the societal development. This means that it is crucial to assess how we can achieve satisfactory transparency for shareholders and what is optimal for the company.
 

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Anna Jansson, senior advisor monitoring IPOs on the Nasdaq, was one of the speakers at the seminar on transparency.

 

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Dan Brännström, Secretary General of FAR, explained that information that is too extensive might stop the recipient from seeing what is essential. To his left, moderator Johanna Lybeck Lilja, former State Secretary of the Treasury.

 

Dan Brännström, Secretary General of the auditor organization FAR posed the question of whether a 200 page statement really can be transparent. Is it possible for the recipient to absorb such a large amount of information? “It has gotten out of hand…” said Brännström, adding that he is pinning his hopes on so-called integrated reporting. Such reporting involves financial information in conjunction with, and taking into account sustainability, macroeconomic developments, etc.

 

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The speakers included (from left): Lars Oxelheim, IFN and Lund University, Lars Bjorklund, Skanska, Anna Jansson, Nasdaq, Joakim Strid, Nasdaq, Johan Gernandt, Transparency International Sweden, Ossian Ekdahl, Första AP-fonden, Dan Brännström, FAR and Sidney Grey, University of Sydney.

 

In the panel discussion at the conclusion of the conference a number of speakers agreed that more information does not always mean better information and transparency. "I understand that you believe that the peak has been reached" [in terms of information provided] said Johanna Lybeck Lilja. However, not in regards to the content of the information. Lars Björklund said that "less is more" and Ossian Ekdahl explained that not every piece of information needs to be read. "Just knowing that you could read can have an influence," he said and illustrated with what might have happened if SCA had posted the company’s travel policy on the web.

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