Investors want to see more informative capital management disclosures in annual reports, according to a study by the Accounting Standards Board (ASB).
The ASB’s study, Financial capital management disclosure, found investors are interested in how much financial capital a business needs and whether there is a surplus or a deficit.
The study of the quality of capital management disclosures concluded there is good practice in place but too often there is excessive boilerplate text and too many companies miss essential elements of the required disclosures.
“Capital management is a key discipline that should be on the regular agenda of all boards,” ASB chairman Roger Marshall said. “Adequate capital supports growth and provides a buffer against significant economic shocks so reducing the risk of a liquidity crisis. This is particularly important at present given the pressures on particular sectors facing the impact of reduced government spending.”