In the last twenty years, the American marketplace has seen some major ups and downs. After scandalous failures like the fall of Enron in 2011, the government has had to step into the financial sector in a way that it had not previously needed to. This led to enactments of laws like the Sarbanes-Oxley Act, created to enforce more transparency and greater accountability to the investors, employees and shareholders that support them. These regulations have made investor relations annual reports and public disclosures more important than ever.
Keeping Everyone on the Same Page
The point of annual reporting is to ensure that all people associated with a company – from advisors and chief executives to base-level employees and investors – have access to the same amount of information about the financial dealings and status of the business. This is important in building faith in the company and fostering a sense of trust in potential investors that alleviate any fears or hesitation that might arise when choosing whether to invest.
Software that assists in preparing and releasing annual reports is commonplace in most major companies. After all, this level of accountability is now legally required by all publicly traded businesses, so why not make it easier on the staff responsible?
Preventing Another Market Collapse
The problems that arose in the early 2000’s around Enron, Worldcom and other businesses made it apparent that the entire American marketplace – and indeed, the financial landscape of the rest of the world – can be seriously impacted by the fall of just a few major corporations. In a market that was already stumbling, this situation created a lack of faith in the business world that many companies are still dealing with.
Making information more accessible to consumers and examining the levels of investor satisfaction annually are just some of the ways modern companies are combatting this, even today. To prevent another major collapse like this, businesses rely on investor relations annual reports and other public disclosures to keep shareholders and backers in the know and onboard. It is the hope of today’s business professionals that another financial crisis isn’t anywhere on the horizon, and keeping consumers informed is the biggest move they’re making toward preventing one.
