Transparency

10 Key excerpts on "Transparency"

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  The Pursuit of Sustainable Leadership

  • David L. Rainey(Author)
  • 2008(Publication Date)
  • Information Age Publishing

    (Publisher)

  The Pursuit of Sustainable Leadership, pages 53–82 Copyright © 2013 by Information Age Publishing All rights of reproduction in any form reserved. 53 3 Openness, Transparency and Accountability New Imperatives Introduction Openness and Transparency are two nascent perspectives in the business world. They both convey the notion of being forthright, candid and straightforward about pro- viding the underlying information and data pertaining to the products, services, op- erations, actions, activities and decisions of businesses. They ensure that customers, stakeholders, society, shareholders, employees and other constituents can obtain a comprehensive understanding about the relevant details of the company and its enterprise(s). They imply that business leaders are conducting their affairs in ways that are readily apparent to outside observers and that all non-confidential information and data concerning decisions, effects and impacts are made public to the extent pos- sible and that all disclosures are made in accordance with government regulations and established standards and protocols. Openness and Transparency are simple concepts that have complex implications. Openness implies that everything pertinent to observers is obvious and clear, that nothing is concealed or obfuscated, and that business leaders behave and operate as if everything they decide and do is going to be made public. Simply put, frankness and truthfulness abound. Moreover, openness means taking proactive steps to provide dis- closures to the public on pertinent non-confidential information and data including positive and negative aspects. It necessitates honesty and candor from the most insig- nificant issues to the most troubling problems and from the least important contribu- tions to the most exciting breakthroughs. Openness involves being honest, putting the truth forward every time, disclosing the details properly on a real time basis, and

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  Corporate Responsibility and Stakeholding

  • David Crowther, Shahla Seifi(Authors)
  • 2016(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  “Transparency is fundamentally about the availability of informa-tion to all the actors within the firm, principals, agents and stakeholders alike” ( Cohen & Hiller, 2009 ). The new perception of Transparency is closely attributable to its fourth definition. 6 It has been integrated into corporate governance, CSR, and sustainability debates and practices. Many of recent Transparency studies have focused on CSR and corporate Transparency has become an indispensable part of CSR and business ethics literature ( Vaccaro & Madsen, 2009a, 2009b ), however, Transparency is significantly important for firms irrespective of their CSR strategy ( Dunfee, 2008 ). Even a Friedmantine firm should uphold a certain level of Transparency that is dictated by firms to retain its social license to operate. Nonetheless, the rising demands of the new socially aware generation of consumers exert a great influence on firms that do not engage in CSR and reward the ones that do. There are many examples in this case. 65% of over 6,000 consumers across Brazil, China, India, Germany, the United Kingdom, and the 6 AMIR HOSSEIN RAHDARI United States in the Regeneration Consumer Study in 2012 said that they felt “a sense of responsibility to purchase products that are good for the environment and society.” The Nielsen Global Survey on CSR in 2013 polled over 29,000 people in 58 countries. 43% of global consumers are willing to pay more for goods and services from companies that behave responsibly and sustainably. Cone Communications and Ebiquity con-ducted a survey on global attitudes, perceptions, and behaviors around CSR of over 9,700 consumers in nine of the largest countries (by GDP) in the world. It revealed that approximately all global consumers expect com-panies to act responsibly, but around 50% need to hear or see proof of a company’s responsibility before they will believe it.

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  The Illusion of Transparency in Corporate Governance

  Does Transparency Help or Hinder True Ethical Conduct?

  • Finn Janning, Wafa Khlif, Coral Ingley(Authors)
  • 2020(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  markets . These are concepts that we elaborate on in the next chapter.

  Transparency Is Disclosure

  In corporate governance literature, numerous studies view disclosure (of information ) as a key dimension of Transparency (e.g., Bushman et al. 2004 ; Finel and Lord 1999 ; Madhavan et al. 2005 ; Nicolaou and McKnight 2006 ; Pagano and Roell 1996 ). The relationship between Transparency and information is better grasped by reference to the opposite of Transparency: opacity , which is defined as “the state of being hard to understand, not clear or lucid. When information is not clear or hidden , it is not trusted” (Borgia 2005 , p. 22). Borgia declared that Transparency leads to an endless cycle of information needs : “the more we know, the more we demand to know, the more there seems to be to disclose ” (ibid. ).

  Several works define disclosure as the perception that relevant information is received in a timely manner (e.g., Bloomfield and O’Hara 1999 ; Williams 2008 ), or providing a fast, easy, and inexpensive means of obtaining feedback (Borgia 2005 ). Specifically, Transparency is associated with the need for stakeholders to have access to quality information to optimise their decisions (Braendle and Noll 2005 ) and is linked to voluntary disclosure. Fabrizio and Kim (2017 ) found in the US context that financial intermediaries give better ratings to firms with voluntary disclosure of high quality information, especially for environmental outcomes. While this finding concurs with those of some studies (e.g. Griffin and Sun 2013 ; Arsov and Bucevska 2017 ), it contradicts others.

  Shedding more light on the black box: the new auditor’s report, Prof. Dr. rer. pol. Thomas Berndt, Disclose, Issue 1, 2017, PWC

  “Sunlight is said to be the best of disinfectants. The belief that light – in other words Transparency – is the best protection for participants in the capital markets has been one of the guiding principles of regulators for over a hundred years. Transparency is supposed to provide a better basis for investment decisions, discourage creative accounting practices and generally improve the functioning of the financial markets. In past years, this has prompted much more stringent requirements regarding the scope and detail of the information stock-exchange-listed companies have to disclose in their financial reporting.” (https://​disclose.​pwc.​ch/​25/​media/​pdf/​pwc_​disclose_​1701_​e.​pdf

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  International Accounting and Multinational Enterprises

  • Lee H. Radebaugh, Sidney J. Gray, Ervin L. Black(Authors)
  • 2015(Publication Date)
  • Wiley

    (Publisher)

  Corporate Transparency matters to firms in order to help stock market investors distinguish good quality firms from bad quality firms; otherwise they will tend to treat all firms as being of “average” quality which punishes good quality but rewards bad quality firms. Thus, financial reporting Transparency can have signal- ing properties for good quality firms. Corporate Transparency matters to regulators for macroeconomic reasons—to restore confidence in and expand capital markets, and to encourage investment in the economy. THE MEANING OF Transparency Bushman and Smith (2003, p. 76) defined corporate Transparency as “the wide- spread availability of relevant, reliable information about the period performance, financial position, investment opportunities, governance, value, and risk of publicly traded firms.” Corporate Transparency has been measured as a combination of many firm-specific and country-specific factors. Bushman and Smith’s measure of corporate Transparency includes financial reporting, governance disclosures, avail- ability of annual reports in English, the penetration and ownership of the media in a particular country, and the ease with which private information about firms can be collected and disseminated. Similarly, PricewaterhouseCoopers Opacity Index (2001, p. 4) measures opacity (the converse of Transparency) at the country level as a function of five dimensions: corruption levels, legal and judicial opacity, eco- nomic/policy opacity, accounting/corporate governance opacity, and the impact of regulatory opacity and uncertainty/arbitrariness. At the country level, Bushman, Piotroski, and Smith (2004) identify two kinds of corporate Transparency: financial Transparency and governance Transparency. Country-level financial Transparency is made up primarily of corporate disclosure intensity, timeliness of disclosures, the number of analysts, and media development.

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  Responsible Hospitality

  • Rebecca Hawkins, Paulina Bohdanowicz(Authors)
  • 2011(Publication Date)
  • Goodfellow Publishers

    (Publisher)

  Greater Transparency is also seen as a route to build trust in the brand. And a handful of global businesses are recognising that greater Transparency can be a business asset delivering, among other things, a greater level of trust and reducing corporate risks. This realisation has been driven by the combination of the revolution in information technology, the growth in public interest in the values of the businesses and the increase in the number of third sector organisations and policy makers on the lookout for corporate wrongdoing. These businesses recognise that the boundaries of traditional reporting are blurring and that corporate perform-ance reporting is increasingly being seen as embracing all aspects of a company’s communication rather than the physical report alone. This development may change the current perception of many businesses that the risks associated with a failure to be transparent are seen as small. It will certainly bring into focus for many hospitality businesses the risks of the currently limited scope of corporate reports. Part 4: Fairness and Transparency 241 Text box 52: Pay differentials – an issue to watch One of the issues that is currently focusing minds is the relative rates of pay at different levels within an organisation and the perceived fairness (or otherwise) of the differential between the highest and lowest paid. The underlying issue is a concern that very high lev-els of executive pay contributed to the market crisis in western economies and perpetu-ates business growth strategies that carry a high level of risk and are contrary to effective governance*. Politicians in a number of countries have examined this issue. For example, the UK has had a Fair Pay Commission and US House of Representatives voted in 2009 on control of executive pay.

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  Intentional Power

  The 6 Essential Leadership Skills for Triple Bottom Line Impact

  • Lisen Stromberg, JeanAnn Nichols, Corey Jones(Authors)
  • 2023(Publication Date)
  • Wiley

    (Publisher)

  Tradition- ally, companies—and the leaders who ran them—were loath to be transparent about anything that might limit their ability to drive profits. The goal was to ensure that what was communi- cated was in the best interests of the company—which meant, the best interests of the shareholders. As a result, companies wanted to share as little as possible. In the past, it was often the forces of government that drove companies to be more transparent. For example, the US Civil Rights Act of 1964 launched the Equal Employment Opportu- nity Commission, which requires companies to report data on employee demographics. The 1970 US Environmental Protection 134 Intentional Power Act put in place requirements for companies to report on what chemicals they release into the environment. Other laws such as the Occupational Health and Safety Act require reporting on workplace conditions, and so on. But in the 21st century, the demand for Transparency has shifted from government oversight to a myriad of critical stakeholders including consumers, investors, customers, and employees. As we move from shareholder capitalism to stakeholder capi- talism where companies are being called to deliver more than just profits to shareholders and where technology has disrupted how and what information can be shared, Transparency is not an option, it’s a mandate. Who’s Demanding More Transparency? Consumers A recent study by public relations powerhouse Edelman revealed that 64% of consumers will buy or advocate for a brand based solely on the company’s position on social or political issues. The research further revealed that 60% of consumers say brands should make it easier to see their values and positions on impor- tant issues. If they don’t, these consumers will buy from some- one else. 13 Richard Edelman, president and CEO of Edelman, argues that a company that is not transparent about what it believes in and what actions it is taking to reflect those beliefs will lose sales.

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  Reforming the Public Sector

  How to Achieve Better Transparency, Service, and Leadership

  • Giovanni Tria, Giovanni Valotti, Giovanni Tria, Giovanni Valotti(Authors)
  • 2012(Publication Date)
  • Brookings Institution Press

    (Publisher)

  12

  Furthermore, as Alisdair Roberts points out, openness without Transparency might be detrimental to citizens.13 It is difficult for citizens to extract information that has not been edited with citizens in mind. This is especially the case now, when, thanks to new communication technologies, the quantity of information available and the difficulty of navigating it may actually contribute to greater confusion and an overall reduction of Transparency.14 This view of Transparency can be defined as actionable openness, also shared by Heald,15 which means that the openness is designed for and accessed by citizens and stakeholders.16

  The most relevant definitions, starting from a technical definition, are as follows. The Oxford Dictionary of Economics defines transparent policy measures as “policy measures whose operation is open to public scrutiny. Transparency includes making it clear who is taking the decisions, what the measures are, who is gaining from them, and who is paying for them.” According to Jonathan Koppell, Transparency is a critical tool and also an end in itself.17 Several studies show that an open and transparent government strengthens democracy by providing a defense against forms of bad government, denouncing abuses of power, offering greater protection to minorities through the provision of equal citizenship rights, and providing more opportunities for popular participation. As noted by James Madison about two centuries ago, “A popular Government without popular information or the means to acquire it is only the prologue to a farce, tragedy or perhaps both.”18 The driving force behind all systems of accountability is the democratic imperative for government organizations to respond to demands from elected representatives and the wider public.19

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  China's Governance Puzzle

  Enabling Transparency and Participation in a Single-Party State

  • Jonathan R. Stromseth, Edmund J. Malesky, Dimitar D. Gueorguiev, Lai Hairong, Wang Xixin, Carl Brinton(Authors)
  • 2017(Publication Date)
  • Cambridge University Press

    (Publisher)

  This literature defines Transparency as the ability of the principal (citizens) to observe both the behavior of the agent (officials) and the consequences of the agent’s decisions. Thus, Transparency aligns the interests of prin- cipal and agent. It gives the agent an incentive to follow the principal’s directives closely, at the risk of being sanctioned, while also allowing the principal to better hold the agent accountable. In this way, Transparency is a critical prerequisite for accountability. 55 Tests of the linkage between Transparency and reduced corruption in democracies have delivered relatively strong confirmatory evidence. In the United States, fiscal Transparency is associated with higher levels of legislative effort on the part of politicians. 56 In India, disaster relief efforts 53 H. Zhou, “Open government in China: Practice and problems.” In Fiorina (ed.), Right to Know, p. 105. 54 Ma and Wu, What Drives Fiscal Transparency?; Snell and Xiao, “Freedom of information returns to China.” 55 A. Prat, “The wrong kind of Transparency,” American Economic Review, vol. 95, no. 3 (2005), pp. 862–77. 56 J. E. Alt et al., “Fiscal Transparency, gubernatorial approval, and the scale of govern- ment: Evidence from the states,” State Politics & Policy Quarterly, vol. 2 (2002), pp. 230–50. Drivers of Transparency Reform 42 42 have been more effective where media penetration is higher. 57 Analyses of press freedom and governance (in particular, corruption reduction) have drawn similar conclusions. Better access to information is believed to force politicians to respond more appropriately to citizen demands. 58 The strong theoretical arguments for increased Transparency in demo- cratic settings have influenced a number of international and nongov- ernmental organizations; these actors seek to improve governance in developing-country settings by funding project interventions that are designed to enhance the Transparency of policymaking.

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  Multinational Enterprises and Transparent Tax Reporting

  • Alexandra Middleton, Jenni Muttonen(Authors)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  The blurry line between tax avoidance and tax planning remains the point of contention for enterprises, regulators and tax service providers. Currently, we do not have tools to measure the intent and company knowledgeability of the tax schemes beforehand. 2.1.4 Tax Transparency Tax Transparency refers to the symmetry of information between tax authori-ties and tax payers (Hildreth, 2005, p. 429). We expand this definition of tax 32 Defining tax Transparency Transparency by saying it is the condition when all tax relevant information is voluntarily provided by the company to a wide set of stakeholders. Tax transpar-ency falls into both the legal and ethical domain as we define it in Figure 2.1. Tax Transparency sets aside a company’s voluntary disclosure of information on its tax issues. Tax Transparency can be understood as a form of communication whereby the company shares its approach to taxes, its tax strategy and other tax-related elements it sees as relevant for stakeholders. As discussed in Chapter 1, governments are increasingly demanding higher tax Transparency from MNEs. At the same time, detailed tax information – e.g. satisfy-ing OECD BEPS requirements – is only required to be submitted to governments. This stipulation is justified by the need to protect confidentiality, especially com-mercially sensitive information (Owens, 2014). MNEs do not have a legal obliga-tion to disclose it to the public, except for the extractive and financial services industries in the EU. In our research, we observe that an increasing number of companies choose voluntarily to disclose tax-related information. We try to answer the following questions: How transparent are MNEs? What drives these companies to become transparent if studied through theoretical perspective lenses? We also understand that placing tax Transparency in an ethical domain can be questioned.

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  Transparency in Information and Governance

  • J. Jay Choi, Heibatollah Sami, Suk-Joong Kim, J. Jay Choi(Authors)
  • 2012(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  Then, a specific distinction is made between three components of corporate trans-parency. The first component is called corporate reporting and includes dis-closure intensity, financial disclosures, governance disclosures, accounting principles, timelines of disclosures, and the credibility of disclosures. The second component is called private information acquisition and communica-tion , and concerns the communication with external financial analysts and institutional investors. The third component distinguished is information dis-semination , representing media penetration of the company in general. Bushman et al.’s research implemented this entire corporate Transparency concept empirically and it was concluded that the governance Transparency factor is primarily dependent on a country’s legal/judicial regime, whereas financial Transparency is primarily related to political economy. Corporate ownership is very much dispersed in the 27 wealthiest econo-mies in the world. La Porta et al. (1999) found that except in economies with very good shareholder protection, relatively few of these firms are widely owned, in contrast with the well-known Berle and Means (1932) image of ownership. Based on data collected between 1993 and 1997, they found that large-and medium-sized firms are controlled either by families or the state. The Transparency of the governance systems also varies widely and can be classified into two types of disclosure: mandatory and volun-tary. The mandatory type of disclosure depends first on the country in which a firm is located. Easterbrook and Fischel (1991) extensively discussed the need for and importance of the legal structure of the business environment. The ‘lemon problem’ 2 in particular, as argued by the seminal paper of Akerlof (1970) , is the crux of the economic argument. This Akerlof paper states that a 101 Board Transparency, CEO Monitoring and Firms’ Financial Performance

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