Research on corporate transparency of russian companies-2015

Overall state of corporate transparency of the largest Russian companies

Transparency levels:

I level of transparency“Information disclosure on the level of best international practices”: companies which report according to the international standards and which apply at least one of the procedures for disclosed information verification (excluding financial information assurance):

  • assurance of non-financial information by an independent professional auditor,
  • public assurance of reported information: expert and / or stakeholder assurance.

II level of transparency“Information disclosure under international standards”: companies which prepare reports under the international standards (in addition to the Russian Central Bank requirements).

III level of transparency“Information disclosure beyond Russian legal requirements”: companies which report more than the minimum national reporting requirements (the requirements of the Central Bank of the Russian Federation), that is which additionally disclose information important for sustainable development, compliance with the Code of Corporate Governance and so on.

IV level of transparency“Information disclosure under Russian legal requirements”: companies which prepare reports only under the minimum national requirements (the requirements of the Central Bank of the Russian Federation).

V (zero) level of transparency“Non-transparent level”: companies which do not issue public reports.

Breakdown of companies by transparency levels (729 companies in total)

Conclusions:

  1. There are very few transparent companies among the largest Russian companies. Only 28 of the 729 largest companies in Russia (3,8 %) disclose information about their activities and management in accordance with the best international practices, apply international reporting standard and conduct an independent (external) assurance of information disclosed (i.e. are located on the I level of transparency). Another 16 companies (2,2 %) disclose information using international reporting standards, but without independent assurance (are located on the II level of transparency). The top management of these companies applies one of the two (or both) international reporting standards: the <IR> Framework and/or the GRI Guidelines for information disclosure. Both standards suggest to disclose only material information, which should be so both for the company’s managers and for its stakeholders. Thus, the managers of only 44 companies (6,0 %) uses annual reporting as a communication tool, by defining the substantial issues which have occurred during the year and which should be disclosed in the report in accordance with the stakeholder requests.
  2. Quite a lot of Russian companies disclose information beyond the requirements if the Central Bank of the Russian Federation (III level of transparency). There are 138 such companies among 729 (18,9 %). It can be said that the top management of these companies begins to see annual public report not only as the result of the Central Bank requirements fulfillment. The report is used also as a means of information disclosure which is important from the managerial point of view. Managers decide on the information that should be disclosed in addition to the Central Bank instructions. However, this reported information (prepared with no account of international standards) is hardly comparable with public reporting of other companies, as exactly the use of the standards makes referencing possible. Moreover, the disclosed information does not consider stakeholder requests, i.e. it is essential for the company, but it might not be the end users.
  3. The majority of the largest Russian companies disclose accounting information only under the Central Bank requirements (IV level of transparency). There are number 293 such companies out of 729 (40,2 %).
  4. The number of non-transparent companies is rather high: 182 of 729 (30,0 %). These companies did not disclose information on their activities and management (V (zero) level of transparency). There are 23 JSCs among these companies.
  5. 73 of 729 companies report information on their activities and management only in English1 (10,0 %). Mostly it is the leading company or its activities only abroad or are foreign residents, or just interested in foreign capital markets (listed only on foreign exchanges). Mostly these are Russian companies operating only abroad, companies which are foreign residents or companies interested only in foreign capital markets (listed only on foreign exchanges).

List of companies surveyed

Subrating of private companies

Subrating of state corporations

Subrating of systematically important organizations

Subrating of companies listed on the Moscow Exchange

Subrating of companies listed on foreign stock exchanges

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