Cross-posted from System Viability and Corporate Governance blog
Agency theory says that the agent (e.g, the management) has many
opportunities to behave in ways that are against the interests of the
principal (e.g the shareholder). This can be explained by an uneven
distribution of power (the agent has too much) and proximity (the principal has too little).
Technology potentially provides greater proximity for those with a legitimate interest. It brings stakeholders closer to what is going on. This proximity may be measured in terms of data accuracy, granularity (finer detail) and currency (more up-to-date).
Some commentators believe that companies should release financial
information to investors more frequently. (For example, monthly
reporting rather than quarterly). Continuous information reduces
surprise, reduces risk, therefore increases the investment return for
the investor and reduces the cost of capital for the company.
Ultimately, such published figures are driven by the company’s internal
data, and could in principle be released in near real-time, subject to
appropriate (automated) policies for filtering and delay.