Can This Hardy Band of Students Save the 10-K?

In our quest to chase perfection in corporate disclosure, we have a valuable resource we can tap into.

Fresh eyeballs.

Yes, the old problem of ensuring that disclosures work well for investors demands fresh thinking and new perspectives. Who better to provide that than a group of talented graduate students?

That’s why I’m thrilled about a new initiative that my organization, the Center for Audit Quality, has launched with the Institute for Corporate Responsibility at the George Washington (GW) University School of Business. It’s called the Initiative on Rethinking Financial Disclosure, and it responds directly to Securities and Exchange Commission (SEC) Chair Mary Jo White’s challenge to streamline Form 10-K disclosure requirements.

Let’s take a closer look.

Teams Compete to Improve Disclosure Effectiveness, Eliminate Redundancy

The initiative is structured as a team competition. Several teams of graduate students at the GW School of Business will study the issues driving concerns over effective corporate disclosure. Each team will then review several Form 10-K reports from randomly selected Fortune 500 companies. Their mission: to improve the effectiveness of the disclosure for investors. The students can, for example, make specific recommendations on ways to reduce unnecessary or redundant reporting requirements, while maintaining the integrity and value of the information for investors.

Governance Experts on Board

Students aren’t going entirely alone on this. The initiative has organized an advisory committee co-chaired by the Honorable Cynthia Glassman, Senior Research Scholar at the Institute, and me. We’re very grateful for the academics, practitioners, and others who have volunteered for the advisory committee. They are:

• James Glassman, Chairman and CEO of Public Affairs Engagement and Visiting Fellow, American Enterprise Institute
• J. Richard Knop, GW Trustee and Managing Member, FedCap Partners
• David Martin, Partner, Covington & Burling
• Aeisha Mastagni, Investment Officer, Corporate Governance, CalSTRS
• Susan Phillips, Professor of Finance Emeritus and former Dean, The George Washington University School of Business
• Troy Paredes, Senior Strategy & Policy Advisor, PwC
• Harvey Pitt, Founder, Chief Executive Officer and a Managing Director, Kalorama Partners and Kalorama Legal Services
• Jason Polun, Director of US Equity Research, T. Rowe Price Associates
• Neila Radin, Senior Vice President and Associate General Counsel, JPMorgan Chase
• Amar Sarwal, Vice President and Chief Legal Strategist, Association of Corporate Counsel

Next Steps

The final projects will be presented for judging this September. Then, the most effective recommendations will be compiled into a report that will be submitted to the SEC in October 2014.

I wish these students the best of luck. Effective disclosure is a key component of world-class capital markets, and these students, working with their advisors, will have a chance to make a positive contribution to this important public policy dialogue.

I look forward to updating you on the initiative and, as always, welcome your thoughts in the comments.