Digital Financial Reporting

A post Paul Wilkinson made to his Facebook wall and some other things I have been contemplating for a while got me thinking about something. Paul's post referenced this blog entry about Automating Watchdog Reporting. The post discusses the idea of a Bias Modeling Language (BML). This brief quote from the blog entry will give you a sense of what BML is and makes an important point.

The key missing technological piece to automate watchdog journalism is the development of a data model that describes the logic of government officials’ conflicts of interest. The semantic Web can only work its magic on data that have been designed and published based on a field-specific model that makes data integration and logical inference possible.

BML is not the point here.  The creative idea of creating BML is the point.  Other ideas, maybe they are creative, maybe they aren't, which could possibly improve the capital markets might include things like this:

• "Facebook" type web site for the CEO's and directors of public companies.  What if every CEO and director of every public company in the world was requiredto have a Facebook-type account. They would not post pictures there, but they would provide their resumes, history, maybe be required to make certain disclosures.  Basically this is CEO and director data and meta data.
• "Facebook" type web site for public companies.  Take that further, what if every public company was requiredto have a Facebook-type account.  They can still have their web site where they can organize things however they want, what if they also had to provide information in a somewhat prescribed format, they had a "wall" where they could post information, they had "friends" (i.e. shareholders and potential shareholders could subscribe to the company). They can post their mission statements, financial statements, carbon footprint information, sustainability reporting, triple bottom line reporting, etc. While company web sites are organized how a company wants you to see the information, the Facebook-type system has a more consistent framework.
• Open source regulator/regulation:  What if the SEC made their new IDEA (or I hear that it may get a new name) system "open source".  The SEC provided a "shell" and that regulatory framework "shell" could be modified or supplemented to sort of like a wiki. What if the SEC ran the Facebook-type systems for public companies and the CEOs and directors and any use could go assign meta data to information which was posted, post comments, etc.
• "Facebook" type web site for shareholders.  Heck, maybe each investor should also have a Facebook-type account so the companies can know who they are.  Maybe not.
• "Facebook" type web site for analysts. Makes sense.

All this metadata could be weaved together into a semantic web of information useful to looking for patterns which could identify potential future problems.  All these things sort of exist today but more informally, not interconnected very well, the metadata is not really well organized.

So, just as the BML helps organize and automate watchdog journalism, all the things I mention above would help organize the capital market. Heck, people say that "the market is the best regulator".  Do we even need regulators like the SEC?  Probably, there needs to be something, or maybe not.  Is government more part of the problem or part of the solution?