Do Business in the Sunshine

“Because transparency increases the fairness and efficiency of markets and fosters investor confidence in those markets, it has the added benefit of encouraging greater participation by investors. This participation means more trading, more market liquidity, and perhaps even new business. .... Thus, we believe that a sound and sensible approach to . . . market transparency will benefit almost everyone -- investors, dealers, and the economy as a whole.”

--Arthur Levitt, former Chairman of the SEC, Testimony Before the House Subcommittee on Finance and Hazardous Materials, Concerning Hedge Fund Activities in the U.S. Financial Markets, March 18,1999


The corporate scandals of the late 1990s forever changed the expectations of shareholders, investors and government regulators as to how open corporations should be in their operations. For public companies, disclosure is a major requirement, and while the private equity players would disagree, I believe even large private companies should follow this rule today.

Conducting business in the open gives investors, customers and business partners more confidence in the company itself. Following Enron and the demise of Arthur Andersen, the mandate for more disclosure of financial dealings, procedures and arrangements inside the corporation grew louder.

Today, there are great expectations that companies will open themselves up not only to shareholders but also to the growing number of business media who want to know just about anything and everything about the CEO and his/her life. The lack of disclosure on everything from foreign operations to executive pay is seen as a sign of poor citizenship.

Press releases and media relations are important, but a dialogue without spin is more valuable. If you’re doing good, you have nothing to worry about.

(c) 2008 Adonis E. Hoffman