In this KPMG survey, a significant majority of respondents (corporate filers) acknowledge that they feel compelled to provide immaterial disclosures to pre-empt potential objections from the SEC and other regulators. The researchers also analyzed annual reports on Form 10-K filed by 25 FORTUNE 100 companies. The findings provide no comfort to investors working to discern risk and relative value in the swelling tsunami of mandated corporate disclosures.
“The reviews of the Form 10-Ks revealed significant occurrences of apparently immaterial disclosure. One notable example as illustrated at the left is that many of the recent Form 10-Ks included disclosures about adoption of recently issued new accounting standards that recited a detailed description of the new standard and concluded with the assertion that the newly adopted standard did not have a material effect on the financial statements.”
The disclosure deluge in capital markets is drowning investors in a tsunami that should reinvigorate our ailing markets, but instead entangles their complex bureaucracy in cycles of self-obfuscation. These cycles increasingly obscure investment risks and relative valuation, and they pose a threat to every investor’s portfolio. In confronting the “Big Data” challenge in capital markets, one conclusion seems clear: traditional, seat-of-the-pants investment analysis — unaided by technology or visual imagery — can no longer reliably map the distribution of risks and relative strengths across industries and peer groups. Join the Visual Finance Revolution.