Financial Transparency as a Factor of a Company’s Attractiveness in the Era of Change

Abstract

In most cases the uncertainty of future business development makes it hard for an investor to opt for the one of many enterprises to invest. In conditions of uncertainty, it is recommended to invest in companies with a good reputation, because such investments are regarded as less risky. In such a situation the attention is increasingly turned to the companies which meet the consumers’ needs: trade, food production, construction. It is known that the value of business is considered to be the main indicator of the company’s reliability and attractiveness for investors. However, the financial transparency of the enterprise is an equally important factor in the investment attractiveness. The financial transparency is expressed in the availability of reporting information on the current state of the operation prospects. The aim of the paper is to suggest and test the financial transparency evaluation algorithm based on the selected criteria. This algorithm allows the investor to make a decision in favor of the companies with the high financial transparency, profitable for investment. The paper more specifically focuses on the investment attractiveness of construction companies in Krasnoyarsk, a major industrial center in the south-eastern part of Russia, though it should be mentioned that this algorithm can be used for companies in another manufacturing sector as well.