Question

It seems as though outsiders are always looking for more detailed information while companies are always trying to keep information confidential. Who’s right? Where do you draw the line?

1.If you were considering investing in a company, what non-financial information related to the company would you want to learn about? Why?

2.If you were a majority shareholder in a company, would you be willing to spend a considerable amount of money (which could otherwise be productively invested) to track and report non-financial information? Why?

Answer 1

1)​ Although the financial case for making an investment is a vital part of the decision making process for the investors, non-financiak factors can also be important. From the investor's point of view the key non - financial factors considered before heading up with an investment in a company would be as follows :

* meeting the requirements of current and future legislation.

* matching industry standards and good practice.

* improving employee morale, making it easier to recruit and retain employees .

* improving business reputation and relationship with local community.

* improving relationships with suppliers and customers .

* developing capabilities of business and building skills and strengthening management systems.

* anticipating and dealing with future threats and protecting intellectual property against potential competition.

* number of customer complaints.

* brand image.

* execution of corporate strategy.

* quality of corporate strategy.

Consideration of non-financial information related to a company helps the investors to make better decision making situations that has real implications on the financial health of an organization. It also helps to analyze and track the performance level and productivity of the company.

2) Majority shareholder in a particular company will be always willing to spend reasonable amount of money to track out and report the non - financial information. Non - financial reporting is considered by the shareholders as the disclosure of a company's social, environmental and human rights information. It is because the lack of corporate information disclosure of non - financial information restrains corporate accountability and responsible behavior.

Non- financial information reporting is considered as a way to improvr risk management and kong term social, environmental and financial performance and competiveness by the shareholders of the company.For stakrholders it also serves as the way to reinforce the stability and predictability of the firm's performance on financial markets.