Disclosure Dilemma - Script

        Disclosure dilemma is a situation where your company may have some potentially vulnerable information to communicate the information. In this video the focus to be discussed will be on financial reporting choices.

        In financial market there are basically two agents. An agent that has idea for business but does not have the fund to finance it. That is most likely happened for those who want to start their own business. Then an agent who does not have business idea to implement but on other hand has the fund. Therefore the financial information may be facilitate the meeting between these agents and make it more effective. Although it sometimes can also create problem due to most probably the communication regarding this information and phenomenon form example like bank crush and also generated of rumors of information of the financial health of the bank.

        The business activities in the company is determined by business strategy and business environment. Furthermore the accounting system in the company is determined by accounting strategy and accounting environment. So that these combination between the accounting system and the business activity in the company then generate the financial statements. Financial statements are the product of extradited choices by the company. That means these financial statements are the business card of the company. What makes them even play more crucial role in financial market is they also portray the messages that you want to the financial market.

        In every condition handle disclosure dilemmas is important. Therefore there are several strategies that can be used. First is full disclosure where basically you reveal all information that you have. Then is no disclosure which means that you simply try to hide the information that you have. The last is partial disclosure which means that you say something regarding the information that you have but tou do not say the whole or everything. To think about which disclosure will be the most optimal one in all situation will be hard. It needs to consider all situation. However reputation is the crucial factors. The loss of reputation can be very dangerous and can be fatal for the company.

        There are some the crucial factors that have to be determined in choosing disclosure strategy. First is what do you know. It is about what kind of information that you have. Those information may determine your optimal disclosure strategy especially to identify about what you know and what you don’t know. Second is who your audience, in order word is about whom you are going to talk to. The financial market might be not the only one you are talking to. There might be other audiences like government or competitors and others. Third is how can you communicate. It is whether you can communicate this information well or not. Finally is about how much it costs.  The cost of the disclosure might be not only direct but also most of the time is indirect.