What drives firms to report transparently?

Description

The introduction of new international standards in financial reporting in 2005 has made companies’ financial reporting more transparent. But still, not all firms are equally open or transparent about the financial information they disclose, says PhD candidate Henry van Beusichem of Rotterdam School of Management, Erasmus University (RSM). He studied what drives these differences in transparency in financial reporting and discovered that being owned by a bank actually decreases a firm’s transparency. On the other hand, firms with preferred shares to protect themselves against hostile takeovers show more transparency in their financial reporting. He will defend his thesis on 16 June.