What is the definition of Transparency?
Transparency refers to the way financial information (including accounting and financial reports) is provided to shareholders, as well as the actions of a company. These should be done in such a way that these are easily understood by all parties concerned.
The ability to evaluate a company and to make financial decisions (whether to invest or not) highly depends on the clarity by which information is presented to the investor. The financial reports provided by the company are important tools and should not hide key facts about the company.
An investor should take care if the company in question is not as transparent with its financial information. This may be a red flag, serving as a warning about the company's way of dealing with shareholders.
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