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Transparency
means 
open and clear
disclosure
of relevant information to shareholders and other 
stakeholders, also not concealing information when it may affect decisions. It means open discussions 
and a default position of information provision, rather than concealment. 
Disclosure in this context obviously includes information in the financial statements, not just the 
numbers and notes to the accounts but also narrative statements, such as the directors' report and the 
operating and financial review. It also includes all 
voluntary disclosure
; that is, disclosure above the 
minimum required by law or regulation. Voluntary corporate communications include management 
forecasts, analysts' presentations, press releases, information placed on websites and other reports such 
as standalone environmental or social reports.
The main reason why transparency is so important relates to the agency problem, the potential conflict 
between owners and managers. Without effective disclosure the position could be unfairly weighted 
towards managers, since they have far more knowledge of the company's activities and financial 
situation than owner/investors. Avoidance of this 
information asymmetry 
requires not only effective 
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CHAPTER 19
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ETHICAL CONSIDERATIONS 
 
479 
disclosure rules but also strong internal controls that ensure that the information that is disclosed is 
reliable
. 
Linked with the agency issue, publication of relevant and reliable information 
underpins stock
market 
confidence
in how companies are being governed and thus 
significantly influences market prices
. 
International accounting standards
and