Initiative on Rethinking Financial Disclosure
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In January 2014, U.S. Securities and Exchange Commission (SEC) Chair Mary Jo White issued a challenge on improving corporate disclosure to investors.
“I believe we should rethink not only the type of information we ask companies to disclose, but also how that information is presented, where and how that information is disclosed, and how we can take advantage of technology to facilitate investors’ access to information and make it more meaningful to them.”
– SEC Chair Mary Jo White
Five months later, with the official launch of the Initiative on Rethinking Financial Disclosure, the Center for Audit Quality and the Institute for Corporate Responsibility at the George Washington University School of Business (GWSB) took up Chair White’s challenge in an extraordinary fashion.
The power of team competition was tapped to put fresh eyes on a perennial challenge. Four teams of GWSB graduate students began by studying the issues driving concerns about effective corporate disclosure. Each team then reviewed an extensive number of 10-K reports from randomly selected Fortune 500 companies.
Their mission? To identify ways to improve the effectiveness of disclosures for investors.
The Initiative concluded with a panel of expert judges picking a winning set of recommendations. Students did not go it alone. The Initiative organized an advisory committee of top academics, practitioners, and other specialists who provided feedback and guidance along the way.
The top honors went to Elizabeth Moehlenbrock (Master of Business Administration) and Liyuan Su (Master of Science in Finance).
However, the aggregate output of all the students’ work, captured in this document, is impressive. Among the many worthwhile suggestions were the call for executive summaries of certain 10-K items to highlight year-over-year changes and new information and the recommendation to provide more company-specific information, especially in the area of risk.
Effective disclosure is an indispensable component of world-class capital markets. These students, working with their advisors and others in the Initiative, contributed valuable insights that the SEC can leverage as it proceeds in this vital area of public policy. Thanks to the efforts of all involved, the Initiative has proven itself to be a promising model for generating fresh perspectives on pressing policy matters.