ABSTRACT
Charles Waldo Haskins, founding partner of Haskins & Sells and dean of New York University’s School of Commerce, cited the above verse in a 1901 editorial urging U.S. corporations to voluntarily publish annual audited financial statements.1 Although British corporations began publishing audited balance sheets in the 1840s, American investors were still living in the Dark Ages. Neither the U.S. government nor the American stock exchanges required industrial corporations to include audited financial statements in their annual reports. Few corporations voluntarily disclosed their financial condition. Many corporate officers in the early 1900s argued that revealing their
companies’ revenues and profit margins would aid their competitors. Some complained about the cost of compiling, auditing, and distributing consolidated financial statements. Others questioned the benefits of financial reporting, claiming that few members of the general public had sufficient training to understand financial statements. The following statement by Westinghouse Electric’s chairman in 1901 typifies the prevailing thinking of the time:
the Directors as well as the Stockholders who own the largest amounts of stock, [believe] that in view of the existing keen competition and the general attitude towards industrial enterprises, the interests of all would be served by avoiding, to as great an extent as possible, giving undue publicity to the affairs of the Company.2
