OPINION | Corporate Transparency Cannot Be Optional: Why diluting disclosure harms investors

The notion that the discipline of quarterly reporting prevents ambition is therefore weak. What matters is vision and execution, not the frequency of financial disclosure. Here are lessons for Indian investors too.

The idea that reduced compliance can somehow lead to better corporate management is both naïve and dangerously misleading. Long-term corporate vision is not a function of how infrequently a company reports; it is a product of disciplined governance, ethical stewardship, and accountability - elements that disclosure, not obfuscation, enforces.

The Indian case for sticking to governance standards

In India, the risks of diluting governance requirements are even greater. Unlike the U.S., where institutional investors dominate and governance standards are deeply embedded, a substantial proportion of listed Indian companies remain promoter-driven. Here, disclosure is not a bureaucratic formality. It is the primary channel through which retail and other investors hold management accountable. Weakening reporting norms would not only erode trust but also damage equity pricing, which depends on credible, timely and complete information.

Some argue that fewer financial statements allow companies to concentrate on long-term objectives. Yet this reasoning confuses ease of compliance with moral fortitude. Quarterly reporting does not stifle visionary leadership, it disciplines it. Allowing opacity in the guise of long-term thinking risks a culture where strategic mistakes, selective reporting and regulatory capture go unchallenged.

Short-termism is unrelated to disclosure frequency

Fewer reports will not by themselves reduce short-termism. In practice, it is often board priorities and incentive structures that drive management to chase immediate results rather than disclosure rules alone. For business leaders, the more pressing issue is how markets would respond. Even if regulations shifted to allow semi-annual reporting, many investors would still expect quarterly transparency. Any saving in compliance costs or fewer earnings calls would likely be outweighed by wider information gaps, greater uncertainty and higher volatility.

The global premium commanded by U.S. equities is no accident. It reflects market confidence in reliable and standardised financial reporting. Equating reduced oversight with superior corporate behaviour is misleading. More concerning is that similar arguments have begun to surface in India. Some influential voices have pushed for weaker reporting norms, which risks undermining the very trust that sustains investor confidence in our markets.

If India wishes to build its reputation as a credible capital market and global corporate player, it must strengthen its governance framework, not weaken it. Cutting compliance will not cultivate long-term corporate strength. It will invite scepticism, deter foreign investors and perpetuate a cycle of distrust.

SEBI has pushed the envelope

Over the past decade, SEBI has progressively strengthened corporate governance norms, raising the standards of accountability and transparency across Indian capital markets. Regulations around board composition, enhanced disclosure requirements, and stringent reporting practices have elevated investor confidence and brought Indian companies closer to global best practices.

These measures have not only protected minority shareholders but also encouraged companies to adopt more structured internal controls, risk management frameworks, and independent oversight. SEBI’s initiatives reflect a deliberate and forward-looking approach to building a capital market where integrity and governance are treated as strategic assets rather than compliance burdens.

Resistance to governance reforms hasn’t disappeared

Yet the journey remains uneven. Many of India’s top-listed companies resisted reforms that would have strengthened board independence, particularly the proposal to separate the roles of chairperson and managing director. By lobbying against such measures and persuading SEBI to roll them back, these companies reinforced promoter dominance and preserved concentrated power.

This raises a fundamental question. If governance reforms are neutralised to maintain control, can we truly call it corporate governance, or are we merely sustaining private fiefdoms under the guise of listed entities? For India Inc., the challenge is not only to grow in size and profitability but also to align that growth with accountability and fair oversight.

There is a strong case for pruning regulations that are redundant or outdated. Deregulation should aim at removing what no longer serves a purpose, not at weakening the flow of communication with stakeholders. Governance reform must simplify where complexity adds no value, yet it must also preserve the regular disclosures that anchor trust in markets.

For those who cheer President Trump’s latest idea, the takeaway is straightforward. The corporate sector should focus on performance within the framework of regulations and the law. Investors deserve to see that journey measured and shared through regular disclosures. Doing away with such transparency will not solve the challenge of building trust or attracting capital. Companies unwilling to meet these standards can always choose to remain private and forgo the privilege of accessing public funds and institutional support.