Trust and transparency: The role of corporate disclosures in shaping investor confidence in India
Sep 11, 2025
Trust and transparency: The role of corporate disclosures in shaping investor confidence in India
Prof. Anshul Verma, Chairperson, PGPM
“Trust is like the air we breathe. When it is present, nobody really notices. But when it’s absent, everybody notices.”
—Warren Buffett
This quote best summarises why investors lose sleep about a company or business when the information is late, lost, or vague. The primary reason is that the investment market does not like being surprised, and when companies give loose information or no information about their plans and what they are doing, the appetite for risk becomes bigger and the reason for losses steeper.
What is a corporate disclosure?
A corporate disclosure is a trust-building mechanism that provides accurate and timely information about a company’s financial health, risks and outlook, enabling stakeholders to make informed decisions.
Strong disclosures are a pathway helping to bridge these gaps of trust and transparency, and disclosures go hand in hand with transparency. The key practices to maintain transparency are providing financial reports and sharing the progress and risk appetite of the company.
Why does transparency build investor trust?
Trust is the fundamental foundation of any financial market, and investors, whether they are retail or institutional, all want predictability, accountability, and clarity before they invest their capital. Corporate disclosures help us build investor trust primarily in three ways.
Removing uncertainty: The timely information about a company and its activities helps build information and lowers speculation, which helps stabilise markets.
Credibility building: Any company disclosing the reports shows ethical intent and long-term commitment.
Helps ensure fairness: The reporting on transparency helps equal access to information for all investors.
How has India’s disclosure practice evolved?
Over the past two decades, India’s corporate reporting landscape has matured. Regulatory reforms by the Securities and Exchange Board of India (SEBI), (LODR) have raised the standards of reporting and the Companies Act, and global standards have pushed to disclose more than just financial results. The evolution of India’s disclosures practice can be divided into three stages, as
Early stage: The earlier stages were compliance-driven, with limited detail of balance sheets and profit-loss statements.
Post-liberalisation stage: After the process of liberalisation of 1991, India started adopting compliances such as quarterly reporting, reviews, and corporate governance norms.
Recent reforms stage: The recent reforms have led to even the disclosure of the board-level decision-making processes. Also, Business Responsibility and Sustainability Reports (BRSR) have become mandatory for the top 1,000 listed companies. It helps investors make informed decisions using non-financial insights.
This evolution over the three stages has led to improvement in various types of compliances and disclosures.
Why build investor confidence in India’s growth story?
India is one of the world’s fastest-growing economies. It also wants to become the world’s largest investment hub. In order to achieve the confidence of investors, greater economic activity alone cannot guarantee capital inflows.
Investors all over the world are looking to invest in all sorts of economies, like emerging markets, developing countries, or assets.
The reason they would and are investing in India is not only the demographic dividend or digital revolution but also a chance to invest in a transparent economy that offers compliance not only to investors but also to corporates.
Implications and challenges for corporates, regulators, and investors
To understand how the evolving disclosure practices affect different players in the market. Here is the table explaining the implications and challenges for corporates, regulators, and investors in India:
Stakeholder
Implications (positive impact)
Challenges (current gaps)
Corporates
Attract global investors
Lower cost of raising funds
Benchmark with global peers
Disclosures as a checkbox exercise
Vague reporting
Greenwashing regulations
Regulators
Ensure consistent reporting standards
Stop market manipulation
Align with global practices.
Capacity constraints
Uneven enforcement
Full convergence with IFRS pending
Investors
Accessible disclosures for decision-making
Reduced uncertainty and risk
More participation in markets
Investors face complex reports
Global investors see gaps
Delayed filings erode trust
How is ESG shaping the future of business?
Investor confidence can’t be built overnight and requires a sustained effort and commitment to values, transparency, and accountability. In today’s world, just financial disclosures are not enough.
Investors want to know and associate themselves with companies that are environmentally responsible, socially inclusive, and governed with integrity. This is where ESG (Environmental, Social, and Governance), along with SEBI’s BRSR, comes into play; companies need to provide how they are creating a long-term value for the society.
For India to draw global investments, a robust framework for disclosure practices is essential. Clear, future complaint norms like ESG and the use of new technologies and methods in disclosures will yield good results and help make India a global hub of investors.
The Post Graduate Programme in Management (PGPM) at SPJIMR prepares leaders to meet all these challenges. The PGPM curriculum goes beyond compliance and offers in-depth courses on financial reporting, governance standards, and ESG frameworks.
At SPJIMR, we nurture leadership that tackles all types of industry shifts, inspires stakeholders and leads with responsibility and purpose.
FAQs
How do disclosures impact investor confidence?
They give investors the right information about a company’s risks taken, future, and also present performance in the financial markets. The disclosure is also a trust building exercise between investors and a company, which showcases the company’s transparency.
Why do governments ask companies to disclose information?
The government asks companies to disclose information. As to,
To protect investors from fraud
To maintain trust in financial markets
To encourage healthy competition
To build healthy confidence between various businesses.
How do ESG reports help attract new investors?
ESG reports of a company reflect the values that a company holds important and how it views the world in a long-term view. It helps companies meet global trends, improves reputation, and builds trust.
How has India made business reporting more transparent?
India has introduced strict rules in terms of compliance with the help of its body SEBI. New rules have been set in place, like mandatory quarterly results, digital reporting, and ESG reports that go way further than just financial impact.
How do disclosures impact India’s economy?
A disclosure is helpful in bringing domestic and foreign investors, helping bring more money into the financial markets. This also helps in strengthening the economy, growing, and creating new jobs for the country.
About the faculty
Anshul Verma
Anshul Verma holds a double doctorate from Dr. B.R. Ambedkar University, with specialisations in Management and Applied Business Economics. Over the course of his 20-year academic career, he has served as a faculty member in finance at leading graduate management institutions in India.
