The Disclosure Dilemma: When More (Data) is Less (Information)!

Aswath Damodaran
Aswath Damodaran
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Published 2021-07-14
Disclosure requirements on publicly traded companies have mounted over the last few decades, making for heftier annual reports and financial filings. But is all of this disclosure helping investors? In this session, I start by looking at the bloat in financial filings (using 10-Ks and S-1s to illustrate) and the reasons (primarily regulatory and accounting disclosure mandates). I look at why this increased disclosure is not helping investors, arguing that information overload and a misunderstanding of audience & mission are contributing. Finally, I set out four principles on disclosure - less is more, know your audience, focus on the future (not the past) and triggered disclosures (where only a subset of firms are required to disclose) that should govern disclosure rules, in general, and the coming debate about ESG disclosure, in particular.
Slides: www.stern.nyu.edu/~adamodar/pdfiles/blog/Disclosur…
All Comments (21)
  • @juanjuan5314
    I’m glad I’m not the only one finding the 10Ks difficult to read…
  • @andrewgoldberg4225
    Thank you Aswath! The fact that both your blog and lectures/courses are online for free for anyone to access and learn more about makes you an incredible teacher and human in general! Bless you and your loved ones professor!
  • @buihuunam1872
    I am glad that you post your sessions publicly. These valuable and informative discussions need to be spread more widely.
  • @whatwelearned
    "If our competitors do much better than we think they will we're in trouble" "okay thanks for letting me know" haha
  • @edsonmachel7516
    “Written by accountants and lawyers melted into one”😂😂😂
  • @unik1654
    Bravo prof. Damodaran! I did my masters research one year ago and it was torture to dig in those useless sections of 10k. I also tried to do natural language processing on the reports, but I didn't manage to get much out of it because they are so full of garbage.
  • @ajmal5258
    Thank you Sir Ashwin. For all the information you have provided me.
  • @andersneldebergnielsen4972
    Not sure I agree with you on the risk section being useless. I often read through the risk sections to be able to understand the industry and its risk. However I do agree that the completely obvious risk on competitor risk etc is useless The impairment section I often use to find a reasonable discount rate for valuation In my view the most useless part of Annual reports is disclosures on FX risks, interest rate risks. Nobody understands these disclosures and they take up a lot of pages Good news is that IASB has acknowledged the information overload issue as the have started a project to review disclosure requirements
  • @GNBcorporal
    in our society and regulations for years their has been a drive towards complexity to where you need experts to help you understand the rules that experts wrote. We should strive for simplicity and clarity in our regulations instead. Creating jobs for the sake of it is actually very harmful to society.
  • Thank you! BR from Germany