Institutional EYE

Commentary on Corporate Governance Issues

Infosys: Is this all overdone?

October 23, 2019

Given the damage that the Infosys episode has caused, one can argue that the company should have been more forthcoming. There were occasions when the company could have made a full disclosure and if nothing else issued a holding statement. It could have done so when the letter was first received or after the board meeting where it was decided to investigate this fully or when tasking its auditors to do so.

 

But conversely, there is such a thing as opening yourself too much through excessive disclosure. Does a disclosure of an investigation into a whistle-blower complaint fuel more fears or does it provide comfort? What if the board feels the complaint is frivolous, but it turns out that there was substance in the allegations? Or the management panicked, and dispensed time and energy only to find it was boxing shadows? When should the disclosure be made – once a complaint is received or when the board decides to investigate or once the investigation is complete and there is something more tangible to share with investors? Unfortunately, there are no straight answers.

 

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