Thursday, 1 September 2011

Quarterly Reporting

The issue of quarterly reporting was brought up recently in combination with the launch of the Corporate Governance Blueprint 2011. I find it completely shocking that certain quarters are even considering abandoning them in favor of half-yearly reporting, Minority Investors are already so much disadvantaged by the huge information bias and the lack of adequate enforcement.

Some very useful insights from other bloggers are here:

"Swift disclosure of relevant information to the market is of vital importance. The introduction of quarterly reporting, and the rapid dissemination of reports and corporate documents through the internet, have been among the most constructive developments of recent years. I therefore note with great concern the planned review on "whether to retain the current practice of quarterly reporting" (p.48).

A quarter may indeed "not provide a long enough period to draw a conclusion about a company's financial position or performance"; but nor does a half-year, or a single full year. Any long-term investor will analyse the company's development over a sequence of periods. The provision of quarterly information provides a better picture of the business, as well as a more up-to-date one. The text suggests that "the shorter time period lends itself to manipulative reporting": on the contrary, anomalies are much easier to spot in a quarterly context, and manipulation may be harder to sustain.

Quarterly reporting should be retained and enhanced, following international best practice. Examples to consider should not be the laggards cited in the text, but those of Thailand, Singapore, Indonesia, the US and Japan. Quarterly reports should be strengthened by the inclusion of a cashflow statement, full notes to the accounts, and the expectation of an informative statement (which need not be long) on current business developments."

"I can't believe this issue is even brought up. Look, why was the quarterly earnings introduced?

Why? It improves transparency. It gives the investor 'some' whatever small insight to what's happening to the company that they have vested interests in. By knowing what's happening, it helps protects the minority investor against accounting fraud. It also provides much information to the prospective investor. That's my simple reason why the quarterly earnings reporting must be maintained."

And all this simple concerns were easily spotted right there and then, with the help of quarterly earnings reporting."

"Quarterly earnings is a must. And if the listed company thinks that it's a waste of time, then the listed company should not waste the stock market's time being a listed entity.

We all want a fair and fully transparent stock market!"

"However, I am very much against one issue discussed in the blue print, that is, to reduce the current quarterly reporting to a half-yearly one. Although the issue did not make it to the recommendation list, the mere mentioned of it is shocking. I welcomed the decision to shortened the submission time frame for quarterly and annual report to ensure more timely disclosure. But, to shortened the submission time frame of annual report but at the same time revert to half-yearly reporting, it is like taking a half step forward and one step backwards. Net net, we are taking  half step backwards."

I fully agree with the entire above, nothing else to add.

Please don't forget to give feedback to the Securities Commission about the Corporate Governance Blueprint 2011. All feedback can be emailed to by 15 September 2011. This is one of the rare moments the public can speak up, let them know what you think. I have done my submission (29 pages), I don't expect everybody to write so much, but just one paragraph or better one page about the blueprint and/or in general about Corporate Governance in Malaysia, that would be very good.

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