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

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.

[CaseyBurnsInvesting]

One of the few true financial geniuses on the net.

[andrewgoldberg]

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!

[buihuunam]

I am glad that you post your sessions publicly. These valuable and informative discussions need to be spread more widely.

[juanjuan]

I’m glad I’m not the only one finding the 10Ks difficult to read…

[unik]

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.

[whatwelearned]

"If our competitors do much better than we think they will we're in trouble" "okay thanks for letting me know" haha

[edsonmachel]

“Written by accountants and lawyers melted into one”😂😂😂

[ajmal]

Thank you Sir Ashwin. For all the information you have provided me.

[abdullahabd]

Damodaran's war against accountants continue...

[SBK]

Great video as always! Only thing I don’t agree with: i don’t think there needs to be any disclosure for traders. Companies, rightly, don’t care for or care about traders and rather focus on investors. Trading doesn’t really add much value to companies in general IMHO.

[NilayMukhopadhyay]

You always talk with data & on point. 👍

[andersneldebergnielsen]

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.

[bb]

These are useful information as they tell about tge companies view of itself and their blindspots, and I think if you can get enough of this information you can guess the mustake tge sector or market makes

[grenjith]

Thank you for doing this. World is certainly a better place because of all the sessions that you have shared. God Bless.

[mihaillapin]

>in November accountants wrote down to reflect the loss, everybody knew that it was in September - fair value procedures are not frequent.

[lakshmishalaksh]

hello sir, firstly, thanks for the video, that was very informative. I had a small request, SEBI in India is removing all of leverage in Futures and Options with the justification being that they intend to save retail investors from losses. My understanding is that it wouldn't necessarily help as it would drive more uninformed traders to buy options rather than devise the right strategies to sell the same benefitting from theta decay. Could you please make a short video of your views on the topic and any comparisons/effects that you would have experience of. Good day!

[jeromerouge]

Thank you for all your content !!! I am a big fan of your work :)

[gro]

I disagree that info on internal control or risk section is useless to investors. Who has a good ERM system in place I would expect, as investor, less risk, compared to who hasn't got it, and superior risk adjusted performance, because of a higher resilience.

[NeyTorres]

what is the name of a program that can remove the boilerplates of 10ks?... please don't say Word