Question

With corporate disclosure, discuss the extent of the information that corporations are ethically obliged to disclose to their stockholders and the general public. Relate your answer to specific cases is suggested (e.g., Enron, Martha Stewart, Boesky, and Milken).

Answer 1

Publicly owned companies are regulated by SEC to disclose their information to stockholders and the general public to show transparency in their business. The extent of the information that does not lead to unethical issues to corporations is that these corporations has to disclose information which is related to business not personal information which can invade privacy of people. they are obligated to disclose their financial condition, operating results, management compensation, and other areas of their business

there are many cases in history which lead to ethical issues in corporate disclosure and ethical issues in such situations so law passed law called Sarbanes-Oxley .The Sarbanes-Oxley Act came about because of the stunning and unexpected bankruptcy filed by Enron, an enormous energy-trading company in late 2001. This bankruptcy filing was the largest to date in 2001, it cost investors billions and employees lost far more than their jobs, many lost their life savings. The Enron debacle would have been prevented if audits of the company had detected accounting irregularities or if the company would have been required to disclose transactions not directly reflected on its balance sheet. To a large extent, Enron's failure was the result of corrupt practices. Concern quickly grew about how easily these practices had been carried out and hidden from investors and employees alike.

Section 406 requires public companies to disclose whether they have codes of ethics and also to disclose any waivers of those codes for certain members of senior management.

SEC regulations require publicly owned companies to disclose certain types of business and financial data on a regular basis to the SEC and to the company's stockholders. The SEC also requires disclosure of relevant business and financial information to potential investors when new securities, such as stocks and bonds, are issued to the public, although exceptions are made for small issues and private placements.