"Corporate America and the stock markets have not waited for Washington. Instead, they have undertaken a host of changes in response to the problems highlighted by Enron and reinforced by corporate and accounting failures in the telecommunications, cable and energy industries. Investors have fled companies whose accounting or governance practices fail to measure up to post-Enron standards."

Enthusiasm Ebbs...In Wake of Enron: NY Times June 09, 2002

Full, transparent disclosure instills confidence and trust in investors. This confidence and trust is directly reflected in the stability of the enterprise's capitalization, particularly during uncertain markets.

Improprieties committed by a number of well-known corporations during 2001 and 2002 illustrated the hazards of incomplete or insufficient disclosures. Beyond the direct effects experienced by the subject corporations, such as bankruptcy or federal fraud charges, a sudden and unforgiving investor focus was directed at industry peers and then public companies in general.

Investors focused their attention on pending registration statements and the Forms 10-K, 10-Q and 8-K. They closely examined the financial statements, the related notes and management's representations throughout the documents, looking for disclosures that would settle their fears of similar risks and give them confidence in the enterprise's practices.

When confidence could not be secured, the company's securities came under great pressure from large-scale distribution, and in other cases, funding sources withdrew available debt and equity resources. In many instances, there was not reasonable cause for doubt, but selling and withdrawal of funding resulted because the disclosures did not fully speak to the risks underlying investors' concerns.

Disclosure is not intended to overcome or compensate for industry, business, or enterprise specific risks. Instead, it gives investors the means to fairly assess the risks and returns inherent in ownership of the company's securities. From this, the enterprise establishes credibility and builds its relationship with investors.