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When it comes to the research report the disclosures should be viewed as very informative and very important. It is a shame that it has gone unnoticed by the majority of investors out there. Here we will discuss about the nature of a disclosure as well as the importance it has for investors.

The definition of disclosures
In its own right the definition of disclosures can be considered as to reveal or to uncover. If we were to put it into the context of the stock exchange, especially when it comes to research reports the meaning of disclosure is to reveal the nature of the relationship between that of the company and its employees with the analyst. The research report will provide other statements such as warnings when the investor is reading such reports of the analysis of the company that is the subject of the report which is also known as the subject company. A report that does not have a disclosure statement should be basically treated as trash, as investors you should not trust these so called reports that do not disclose the relationship of the analysis and the company. This is because the research report will only become useful if it has a disclosure as are the importance of the footnotes to that of the corporate financial report, not to mention that it is required that all research reports should contain a disclosure report.

The pros of the disclosures
Like footnotes and the 10k, the disclosure is important to the research report. You will usually find the disclosures at the end of the report and it is generally in fine print. A disclosure is basically information the reveals the nature of the relationship between that of the analyst, the subject company as well as the brokerage house that has employed them. It might take you quite some time to run through the report before you can determine the level of objectivity of that particular report which may or may not be there as well as the individual or company that has commissioned the report.

The cons of the disclosures
On the opposite side of the scale are the cons of having disclosures on the research reports. The disclosure statements are actually written by lawyers and their objective is to protect the brokerage firm more than anything else so do not expect an easy to read piece of information instead you might find a written piece that is full of technical jargons which may cause you to become more confused. They tend to be printed using fine print as they are long and whether the brokerage firms are motivated by going green or they just want to put a strain on the reader’s eyes is a discussion for another time.

Disclosures that start to cause problems
It would definitely be a good thing for all investors out there if there were more disclosures to be included in the research reports. However, if the new rules are not implemented than they are not useful than what we have at this current stage. It would be pointless for the some of the current proposals to suggest the disclosures to contain more information as well as be printed on the front page of the research report. They brokerage houses could take this proposal as adding more words into their disclosure, however this does not mean that it will contain more information.

What can be done about it?
Investors would better understand the disclosures in the reports if the were written in the layman’s term. They should be clear with the disclaimers so that they do not mislead the readers into thinking otherwise. Regaining the confidence of the investors should be their top priority instead of making them even more fearful in light of the current market conditions.