The Economic Impact of the Lack of Transparency in Financial Reporting

Gerald Lander () and Kathleen Auger ()

Atlantic Economic Journal, 2008, vol. 36, issue 1, 105-116

Abstract: Off-balance-sheet amounts are in the trillions of dollars, not including all transactions with off-balance-sheet implications. Financial managers and consultants intentionally structure transactions that are abusive of off-balance sheet accounting rules, which leads to a lack of transparency in financial reporting. This paper explores several ways in which companies manipulate off-balance sheet transactions to satisfy personal and business objectives as well as the impact of such manipulations. It is time for regulatory bodies to close the loopholes, eliminate overly rules-based standards, clearly state the economic objective of each standard, and require firms to disclose the economic motivations for the accounting practices they adopt. Copyright International Atlantic Economic Society 2008

Keywords: Financial transparency; Corporate governance; Economic reality; Ethical awareness; D21; G20; G30; M00 (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1007/s11293-007-9107-5

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