4.Theforminwhichdirectors’salariesarepaid(cash,shares,
etc.).
5.The date on which each director joined the board.
6.The names of the directors on the nomination committee
ItshouldbenotedthattheS&Pcompositescoreisasmucha
governance index asit is an informationdisclosure index,
thoughthefinancialtransparencycomponentoftheindexisa
more direct measure of information disclosure.
Information-Based Index
NeithertheS&PdisclosureindexnorthePriceWaterhouse
opacity indexis designedto measure complexity from the
perspectiveofsomeone doingvaluation.One wayto think
aboutcomplexityistobeginwiththeinputsthatgointothe
valueofacompanyandconsiderallofthosefactorsthatmay
makederivingthoseinputsmoredifficultincomingupwitha
measureof complexity.Forinstance, oneof theinputs we
needinordertovalueafirmisrisk.Itismoredifficultto
estimate risk parameters for firms that are in multiple
businessesthanitisforfirmsthatareinasinglebusinessfor
two reasons: Different businesses can have different risk
profiles,andchangesinthemixcanchangetheoverallfirm’s
risk profile. It becomes even more difficult if the
multibusiness firm provides incomplete or misleading
information on the profitability of each of its businesses.
Breaking down the valuation inputs into their main
components, we can identify the factors that determine
complexity: Table 16.4 representsan attempt (undoubtedly