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The Economic Impact of the Lack of Transparency in Financial Reporting


Off-balance-sheet amounts are in the trillions of dollars, not including all transactions with off-balance-sheet implications. Financial managers and consultants intentionally structure transactions that are abusive of off-balance sheet accounting rules, which leads to a lack of transparency in financial reporting. This paper explores several ways in which companies manipulate off-balance sheet transactions to satisfy personal and business objectives as well as the impact of such manipulations. It is time for regulatory bodies to close the loopholes, eliminate overly rules-based standards, clearly state the economic objective of each standard, and require firms to disclose the economic motivations for the accounting practices they adopt.

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Correspondence to Gerald H. Lander.

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Lander, G.H., Auger, K.A. The Economic Impact of the Lack of Transparency in Financial Reporting. Atl Econ J 36, 105–116 (2008).

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  • Financial transparency
  • Corporate governance
  • Economic reality
  • Ethical awareness

JEL Classification

  • D21
  • G20
  • G30
  • M00