History and Evolution of Corporate Financial Reporting Practices in India: A Critical Analysis

Corporate reporting is the process of communicating both financial and non-financial information relating to resources and performance of a company from time to time to the stakeholders which essentially helps the management in maintaining the accountability and fiscal discipline of the company. In present times, the increased economic, market challenges and regulatory pressures are forcing companies to accumulate and publish relevant information regarding financial performance, social and environmental issues, corporate governance and marketing as well as other information with more frequency, detail and a variety of formats. Understanding the history and evolution of reporting of financial statements in the private sector is essential to seeing the remarkable similarity between the evolution of ‘Right to Information’ issues in the private sector and the current debates on the same topic in our public institutions. Although the history of private enterprise is thousands of years old, a relevant foundation to understand the modern corporation and its associated concepts of limited liability, disclosure and others can be traced back to the corporations of the seventeenth century. This paper deals with the corporate financial reporting practices from historical point of view to understand its growth and factors responsible for it in connection with which the researcher attempted to hypothesised that ‘the evolution and transformation of corporate financial reporting practices is a by product of the country's rapid economic growth rather than its catalyst’. It is important to understand that reliable, consistent and uniform financial reporting is an integral part of good corporate governance practices worldwide to enhance the credibility of the businesses in the eyes of investors to take informed investment decisions.