ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders
Danvers Pharma's board is preparing its annual report. A major lender has asked for detailed monthly cash forecasts and covenant calculations, while retail shareholders only receive the published annual report. Which statement best describes the position?
Lenders can obtain tailored information, such as cash forecasts and covenant calculations, through their contractual relationship, while the public annual report serves general purposes. Stakeholders with power and specific needs often receive bespoke reporting, and this is normal rather than a governance breach.
- ALenders, as a powerful stakeholder with a contractual relationship, can obtain tailored information that is not made available in the public reportCorrect
- BAll stakeholders must legally receive identical information at the same time in every respect
- CThe lender's request should be refused because only shareholders have information rights
- DTailored information to lenders is a breach of the agency relationship with shareholders
Explanation
Stakeholders with power and contractual rights, such as banks, commonly receive bespoke management information under loan agreements. General purpose reports serve the wider group. This is normal, though price-sensitive information must still be handled under disclosure rules, so the other options overstate the position.
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