Transparency and Relevant Business Information

The interest in releasing relevant business information (Corporate Disclosure) has grown extraordinarily in the last decade. As with other issues, such interest was preceded by notorious scandals with severe consequences for the companies involved. There is also, however, a significant ethical dimension.

We all remember cases like Volkswagen, caught lying about the very real emissions of nitrogen oxide from their diesel engines, or Toshiba, that in 2014 exaggerated its profits by more than 1,200 million dollars (about a third of the total). It is not always a question of deceiving people who have a right to know, or falsifying relevant information.

Hiding information, another form of deception

Sometimes the problem is simply not giving, or presenting information in a very incomplete manner. This is what happens with some large companies’ sustainability reports.

In some cases the concealment of information is particularly serious as it affects people’s health, hiding occupational risks to the health of the worker, for example.

An economistic view of the company leads to deciding what to disclose via a cost-benefit analysis. Arguing in terms of risk or reputation, you can even add some consideration of the longer-term consequences, always in economic terms. The problem is that when the risk of being discovered is seen as remote and it is not clear if the investment in reputation is profitable, the reasons for revealing information disappear.

Transparency and corporate culture

The economistic view is poor not only because it ignores important but not strictly economic aspects of reality, but also because of the instrumental rationality inherent in economism. Such rationality is limited (bounded rationality), among other things because it is difficult to foresee all the consequences resulting from not disclosing relevant business information.

The alternative is to act with full rationality, not just with instrumental rationality. Practical rationality, as Aristotle explained, leads to rationally valuing aspects that are neither tangible nor economically valuable. One of them is learning within the organization. Practicing the concealment of relevant information is learned by being done, so and there is no guarantee – rather the reverse – that this learning does not turn against those who promoted it. One way or another operating in a certain way improves or corrupts a character and generates a culture of permissiveness.

Even more important: Practical rationality leads to seeing how the action of disclosing or concealing information affects others. When people are seen as beings with dignity and rights and it is appreciated that actions can help or hinder them, the people who practice it are morally enriched: they believe in virtues. On the other hand, when people are seen as merely the means to one’s own interests – or if you prefer, what are considered to be the interests of the company – objectifying people becomes “learned”, with a progressive loss of appreciation for their dignity and rights.

The latter is not only unethical, but also very risky in the long term for the business, because the people affected are not inert beings, but conscious, free beings that learn. If they are deceived or have relevant information hidden from them, they will learn that they are not loved and with this realisation, one cannot expect their reaction to be one of trust, loyalty and a willingness to cooperate. Acting virtuously gives greater guarantees than thinking only in terms of risk management.

One thought on “Transparency and Relevant Business Information

  1. I agree with your article. a lot of big companies that hide information and presentation of information which is incomplete.

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