Case 1-2 Global Benchmarks: Infosys
Technologies Limited Investors, individual, corporate and institutional, are increasingly investing beyond national borders. The reason is not hard to find. Returns abroad, even after allowing for foreign currency exchange risk, have often exceeded those offered by domestic investments. Infor- mation provided in a firm's annual report is often the major source of information available to those seeking to sample for- eign equities. In attempting to assess the risk and return attributes of a given com- pany, readers must answer questions such as the following: What accounting princi- ples were employed? Should the financial statements be restated according to a different set of accounting principles to be more useful? What types of information are not provided that one would expect to find in financial statements of companies from the investor's home country? How would one compensate for limited disclo- sure? What does the audit report reveal about the level of audit quality? What auditing standards were used? Are they acceptable? Does the audit report mean the same thing as it does in the reader's home country? Appendix 1-2 (refers you to) the financial statements (including selected notes) and auditor's report for Infosys Technologies Limited. Infosys was incor- porated in 1981 as Infosys Consultants Private Limited, as a private company under the Indian Companies Act. Its name eventually evolved into Infosys Technologies Limited in 1992, when the company went public. Its mission is to provide high quality and cost competitive technology solutions for companies around the world. It has grown into a $5 billion company with a market capitaliza- tion in excess of $15 billion. In examining the information (referred to) in Appendix 1-2, comment on how the statements of Infosys stack up to other companies in the industry in meeting the information needs of a nondomestic investor such as yourself. Specifically, what reporting practices raise issues for you? What reporting practices do you find particularly helpful? In preparing your cri- tique, compare the reporting practices of Infosys to a service provider in your coun- try, most of whom maintain corporate Web sites on the Internet.
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