Investors possess a "genuine demand" for real-time reporting, according to a survey by the Association of Chartered Certificated Accountants (ACCA).
ACCA has published a survey in which 300 investors were queried regarding the frequency financial reports were released.
Some 85% of respondents said that real-time data would improve their ability to react quickly, and 78% said it would improve investment returns.
The survey defined "real-time reporting" as the continuous release of financial information rather than at set time intervals.
On the other hand, about two-thirds of the surveyed investors said that real-time reporting would lead to further financial instability and an "increased tendency to short-termism in the financial markets." They also feared that an increase in market volatility would likely follow.
The survey found that policymakers’ attempts to encourage long-term thinking and discourage "short-termism" may be foiled by a move towards real-time reporting. It went on to state that real-time reporting may lead to "a greater emphasis on investor churn."
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Some investors were concerned that faster reporting speed would lead to a decrease in the reliability of information. However the surveyshowed that some retailers release their unaudited Christmas sales figures shortly after the New Year, and they are often used by investors to judge their performance.
The surveyalso noted that the timely publishing of financial information helps to reassure the market and improve the image of the firm.
Despite investors’ and regulators’ misgivings, according to the survey, "a trend towards faster closing will be difficult to resist." The survey recommended "investors, regulators and auditors must consider carefully where the boundaries should lie between speed and assurance/accuracy."
Article by Sebastian Clark