Invest in what you know and in businesses you understand, said one of the world's most successful investors, Warren Buffett.

Over the years, each time a corporate scandal has occurred, new regulation has quickly followed. It was in the late 19th Century that the New York Stock Exchange first demanded public companies be subject to independent audits after railroad companies issued fraudulent financial statements.

Since then regulations and regulators have developed and adapted to corporate events and investor demands and we now have the Enron accounting scandal to thank for the Sarbannes-Oxley Act which came into force in 2002 and requires US listed companies to adhere to specific corporate governance standards. No doubt there will be further regulation following the unearthing of Bernard Madoff's ponzi scheme in the US in late 2008, which defrauded investors of billions of dollars. Throughout corporate history, markets and their regulators have always sought ways to improve transparency, disclosure and corporate governance.

Why? To protect investors, capital markets and ultimately the reputation of a nation's economy. That is why Bermuda is following Canada and will be adopting International Financial Reporting Standards (IFRS) by the start of the fiscal year 2011.

Already adopted in almost 100 places around the world , IFRS is designed to make corporate financial statements easier to understand and more transparent. As IFRS is adopted in capital markets throughout the globe, not only does this bring Bermuda in line with international standards, but it will also make it easier for investors to compare companies listed in different countries.

Some listed companies, particularly smaller ones, fear there is a downside in terms of financial cost and administrative burden in adopting IFRS. However, according to John Wight, chairman of the Institute of Chartered Accountants of Bermuda (ICAB) and Chief Executive of Bermuda Stock Exchange (BSX) listed insurer BF&M Ltd., the change to IFRS "is not that onerous".

Yes, there will be a large one-off cost in converting to IFRS reporting standards, but surely the long-term benefits to both a company and its stakeholders outweigh this cost? To invest in something they know and understand, investors in Bermuda listed companies need to have not just access to regular financial statements from the companies they invest in, but they also need to be able to trust these financial statements.

Investors need to know that the company's Board is accountable to them and investing in a company listed on an internationally recognised stock exchange can provide this assurance. These investments, after all, are many people's livelihoods; they are their savings, their pension plans and their financial future. They need to have trust in the companies and management where they are putting their money.

For many companies, a stock exchange listing is the pinnacle of its achievement - the company has arrived. A listing can significantly enhance the financial status and brand of a company, and therefore, it's value. Listed company stock can be used as a currency in a corporate transaction. It can provide employees with incentive schemes, is an alternative source for capital raising and provides liquidity for these shares.

Unfortunately, recent economic and financial events have dampened investor appetites around the world. In Bermuda however, this is not necessarily the case. The Bank of Butterfield's successful $200 million preference share offering and successful BSX listing in the first half of 2009 is an excellent example of investor demand for interesting and local investment opportunities.

A vibrant, well-regulated and accessible stock exchange is a vital part of any modern capital market and is particularly important for economic advancement. In Bermuda, the BSX provides companies with the opportunity to raise money for future growth and development while at the same time, giving investors the chance to benefit directly from that growth by investing in a more secure way, in publicly listed companies, through regulated brokers, instead of having to use more opaque avenues. Investing outside a stock market can be risky and, for smaller investors, difficult. The 'over-the-counter' market for example is not as closely monitored as the stock exchange market, meaning the companies and dealers are not held as accountable. It also becomes more difficult for an investor to find important and useful information about their investment. Not only is a delisted company no longer obliged to publish such detailed and regular financial statements, but there is no longer the informed research of qualified analysts to assist either. Also, and most importantly, by losing access to a central pricing system, an investor has no way of gauging prices. A stock exchange on the other hand has a transparent pricing system as well as a settlement system that is carefully overseen and tightly regulated.

While the move to IFRS may seem like a burden and a cost to some listed companies, this can be offset by improved value, alternative capital sources, more effective investor protection and more opportunities for growth - not just company and individual wealth growth, but the development and improvement of Bermuda's economy and capital market for future generations.