In order to have efficient markets, stakeholders must have access to clear and accurate data and related disclosures that allow for insight and interpretation of that data. The Western world has long touted the importance and benefits of such corporate transparency and has numerous organizations and government agencies tasked with defining appropriate practices and policing compliance. However, recent studies suggest that the US is lagging behind other Western nations and by some standards, even behind countries whose reputation for transparency is not particularly strong.
This related article on corporate transparency describes these recent studies.rating corporate transparency on factors generally of importance to reporters and researchers. While Western Europe and Australasia are at the top of the list, the US and Canada sometimes lag behind the the more “intrusive, bureaucratic and authoritarian states” of China and Russia. This occurs because these countries’ emphasis on monitoring behavior and managing markets requires the open transmission of business data, usually online and in a publicly available manner.
These rankings must be interpreted in the context of the measurement tools they employ. While these reports apply specific definitions of transparency, one cannot ignore that transparency into underlying financial reporting as required by domestic organizations such as the Public Company Accounting Oversight Board (PCAOB) is a separate matter. As described in this prior article, China especially suffers from concerns that its financial reporting practices are not as transparent as they should be.