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Definition of 'Disclosure'

Disclosure is the act of providing information about something. In the financial world, disclosure refers to the obligation of companies to provide investors with information about their financial condition and operations. This information is typically provided in the form of financial statements, which are audited by independent accountants.

Disclosure is important for investors because it allows them to make informed decisions about whether or not to invest in a company. By providing investors with information about a company's financial condition, disclosure helps to reduce the risk of investing in a company that is not financially sound.

There are a number of different types of disclosure that companies are required to make. These include:

* Financial statements: These statements provide a comprehensive overview of a company's financial condition and operations. They include the balance sheet, income statement, statement of cash flows, and statement of shareholders' equity.
* Management discussion and analysis (MD&A): This document provides an overview of a company's business and financial condition. It also discusses the company's future prospects and risks.
* Risk factors: This section of a company's annual report identifies the key risks that the company faces.
* Other disclosures: Companies may also be required to make disclosures about other matters, such as pending litigation, environmental liabilities, and executive compensation.

The Securities and Exchange Commission (SEC) is the federal agency responsible for enforcing the disclosure requirements of the federal securities laws. The SEC has a number of rules and regulations that govern the disclosure of information by public companies. These rules and regulations are designed to ensure that investors have access to the information they need to make informed investment decisions.

Disclosure is an important part of the financial world. It helps to protect investors by providing them with the information they need to make informed decisions about their investments.

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