I have already spoken of the way that a clear yardstick has helped the Bank improve its transparency. The same idea holds true for financial statements. Clear and accurate corporate reporting, together with other reliable information for investors, are essential. Equally importantly, information must be presented in a straightforward manner. Earnings reports should be used to disclose information, not bury it.
We can’t pretend that hundreds of complicated pages lead to the type of disclosure that facilitates efficiency. Next, confidence must be constantly earned by corporate managers and directors, auditors, analysts and investment advisors, rating agencies and regulators. Reputations have been threatened by events like Enron, and by the suspicion that some insiders have been feathering their nests at the expense of shareholders.