Why can’t a stockholder “inspect the company’s books”?

If a stockholder could literally inspect the company’s books, a company’s competitors could buy a few shares and use their new relationship as a stockholder to obtain confidential competitive information. Also, a constant stream of stockholders passing through a company’s offices and going through its records could create quite a disruption to its business. Instead, stockholders are entitled to regular financial reports according to standard accounting formats, an obligation discharged through the formal annual report and 10K form (the non-glossy annual report required to be filed with the Securities and Exchange Commission).

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