Investors believe that a move towards ‘real-time’ reporting would enhance investor returns and improve the level of confidence in corporate reporting, reveals ACCA’s latest research examining how corporate reporting is changing in the face of demands from investors.
The study suggests that companies which provided information on a continuous basis would be perceived as having better corporate governance, and would attract investment more easily.
The main findings of the survey of 300 investors are:
• 85% say that real-time data would improve their ability to react quickly
• 78% believed real-time reporting would enhance investment returns
• 75% would be prepared to pay more for real-time information to be externally assured.
• 73% would consider companies that report in real-time to have more robust corporate governance
• 71% say it would increase their understanding of corporate performance
• 70% say that companies reporting in real-time would have an advantage in attracting investment
• 65% say it would reduce costs of doing business with such companies
• 51% said it would increase liquidity in financial markets
There are however, downsides to such a move. Almost two-thirds of investors surveyed believed real-time reporting would create further financial instability and lead to an increased tendency to short-termism in financial markets. Most also thought an increase in market volatility was likely.
The areas where investors say they would value the ability to react faster are in emerging opportunities and profit warnings. With regards to liquidity and general financial information, assurance is believed to be more essential.
The report is the third in a four-part project undertaken by ACCA in 2013 to understand the investor perspective on corporate reporting. The first two papers in the series were published in June 2013.