transparency investment & finance definition
Describes
the situation that occurs when companies openly communicate important
information to investors and shareholders.
See transparency in Wall Street Words
The full, accurate, and timely disclosure of information.
Case Study Ford Motor Company executives indicated in spring 2001 that the company planned to provide shareholders and analysts with greater transparency of the firm's financial results. As part of the improved transparency, Ford was expected to report separate results from its Premier Automotive Group (PAG), comprising Aston Martin, Jaguar, Lincoln, Land Rover, and Volvo Cars. In the prior year Ford reported an operating loss of $35 million in Europe only because income from PAG and customer services mostly offset operating losses of nearly $1 billion in its other European operations. At the time Ford did not report profits for individual brands or product groups. Transparency permits shareholders and analysts a greater understanding of a firm's operations, including which parts of the firm are most and least profitable. This, in turn, places greater pressure on the firm's management to produce acceptable results in all facets of a company's operations.
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