Replies to post #32919 on NorthWest Biotherapeutics Inc (NWBO)

[Rkmatters]

Great post.

[Not_a_Doubt]

Great post.

[austinmediainc]

I guess we'll have to disagree. If anything, being transparent and truthful would take ammunition away from shorts and the likes of AF. The lack of information isn't helping them nor is it hurting shorts, IMO it does the exact opposite. All these long drawn out theories as to why they are being so secretive.....in my experience people are secretive because they are hiding something bad. But if it makes everyone feel better that a company they are invested in doesn't share information, who am I to disagree.

Ask investors what kind of financial information they want companies to publish, and you'll probably hear two words: more and better. Quality financial reports allow for effective, informative fundamental analysis.

But let's face it, the financial statements of some firms are designed to hide rather than reveal information. Investors should steer clear of companies that lack transparency in their business operations, financial statements or strategies. Companies with inscrutable financials and complex business structures are riskier and less valuable investments.

Transparency Is Assurance
The word "transparent" can be used to describe high-quality financial statements. The term has quickly become a part of business vocabulary. Dictionaries offer many definitions for the word, but those synonyms relevant to financial reporting are: "easily understood," "very clear," "frank" and "candid."

Consider two companies with the same market capitalization, overall market-risk exposure and financial leverage. Assume that both also have the same earnings, earnings growth rate and similar returns on capital. The difference is that Company X is a single-business company with easy-to-understand financial statements. Company Y, by contrast, has numerous businesses and subsidiaries with complex financials.

Which one will have more value? Odds are good the market will value Company X more highly. Because of its complex and opaque financial statements, Company Y's value will be discounted.

The reason is simple: less information means less certainty for investors. When financial statements are not transparent, investors can never be sure about a company's real fundamentals and true risk. For instance, a firm's growth prospects are related to how it invests. It's difficult, if not impossible, to evaluate a company's investment performance if its investments are funneled through holding companies, hiding from view. Lack of transparency may also obscure the company's debt level. If a company hides its debt, investors can't estimate their exposure to bankruptcy risk.

High-profile cases of financial shenanigans, such as those at Enron and Tyco, showed everyone that managers employ fuzzy financials and complex business structures to hide unpleasant news. Lack of transparency can mean nasty surprises to come.