Form of Voluntary Disclosure: Recomendation and Business Practices in Europe and U.S.

Abstract

The voluntary disclosure of company's private information is increasingly at the center of the attention of managers. This tendency has also been analyzed by several accounting organizations - AICPA1, FASB2, IASC3 and also SEC4 - which have recently developed several documents on the subject. This paper examines the strategic value of the voluntary communication, presents the main differences that still exist between the practices of public disclosure in the U.S. and Europe, explains the process that has led the accounting organizations to issue official recommendations and, finally provides suggestions for the voluntary release of performance evaluation measures. All the reports issued by the accounting organizations are mainly based on North American academic studies and research committees that have investigated the increasing importance of the market-based assets. However, other European research centers - ACCA5, CSEA6, ISEA7, and OECD8 - have further developed a different idea of voluntary disclosure. This perspective is strictly connected with the social and environmental accounting and furthermore, these studies show that an increasing number of companies are continuing to adopt and advance this body of research. The process that has led many North American and European managers to pay more attention to the disclosure of operational and financial measures presents similarities and also differences. The public release of company's private information can be alternatively related with a strategic use of the communication system, in order to meet the information needs of investors, or with a new definition of long-term business sustainability. Consequently, the present article explains the connections between the official accounting organizations' reports on voluntary disclosure and these two main approaches. In summary, this paper focuses on how and why the main accounting organizations and research centers have attempted to help managerial decisions by encouraging voluntary disclosure of private and non-financial information. The fourth section also proposes a different framework with the intention of improving the release of performance measures.