Financial Communication: How to Make Excellent Assessments

Posted by on Jul 15, 2013 in Managing Life | 0 comments

If information is identified and measured by management, but is not communicated to the stakeholders properly, the decision stands void, as it leaves the least or a negative impact on the market as a whole. It affects the dynamics of market largely. Hence, from the decision-making viewpoint, financial communication plays a major role in shaping the investment decisions made by firms and the investors.

The basic role of financial communication plays a significant role in determining the behavior of the market participants in a high asymmetric information background. If we look at the modern business scenario, satisfying the needs of peripheral, as well as in-house stakeholders is a major concern. Financial is designed in such a way that the information provided by this is behaviorally rational and administratively manageable. Developments in the field of financial have also complemented this growth. In the post world war scenario, three major developments in the field of financial have made it possible to go for extensive financial disclosures. These developments are relative contribution costing, target costing, and activity-based costing.

Financial communication have some basic objectives, those make it viable in the present market scenario. It enables the firms to go for higher amount of disclosures. Whenever a firm will go for higher amount of disclosure, it is sure that the transparency level prevailing in the market will go up. Adverse selection will come down by virtue of reduction of information asymmetry. New investors will get timely assistance from firms in case they feel any sort of difficulties. Improvements in RTI act have augmented this feature. The rising complexity in market structure has catalyzed the firms to publish higher quality of financial statements and that too recurrently.

Finally, it can be conferred that financial communication provides a range of benefits to firms, as well as its stakeholders. As the transparency in the financial market increases, firms can easily get hold of the market sentiment. In turn, it provides familiarity and ease to the management while making any firm-wide decision. These decisions incorporate the stakeholders into account. Hence, the future firm performance is well anticipated by investors of various scales and they can change and optimize their investment decisions based on their well-calculated anticipations. Advantage also knocks at the doors of public firms as well. Government takes funding decisions based on information provided by the firms. Hence it in turn reduces their cost of capital and provides a better capital inflow and project finance. Firms being funded through banks and financial institutions also get the similar kinds of benefits.

There are many firms in India those provide solutions on financial communication. To get more information on financial communication, browse through the pages of

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