Chapter 4
Reading Explanatory Notes and Disclosures
IN THIS CHAPTER
Touching on corporate governance
Studying the characteristics of a corporation
Finding out more about a company by reading its notes and disclosures
Figuring out who is responsible for full disclosure
This chapter begins with a quick overview of corporate governance and ends by shedding light on the explanatory notes and other information found in most corporate annual reports. For a complete picture of corporate annual reports, see Chapter 5. Annual reports educate the shareholders about corporate operations for the past year.
Also in this chapter, you find out how a business becomes a corporation, and you review the four characteristics of a corporation: continuity, easy transferability of shares, centralized management, and (the biggie) limited liability.
The complete list of notes and disclosures that may appear on a corporate annual report is quite long, so this chapter can’t cover them all. Instead, it focuses on the most common explanatory notes and disclosures popping up on corporate annual reports.