This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

ACCA survey highlights investor demand for “real-time” reporting

  • ACCA (UK Association of Chartered Certified Accountants) (lt green) Image

23 Sep 2013

The Association of Chartered Certified Accountants (ACCA) has published a report detailing findings from a survey carried out to gather feedback from investors on their views on “real-time” reporting. The report highlights that there is a “genuine demand” for “real-time” reporting among investors who see the benefits that it would bring but also notes that there are a number of “downsides” which need to be taken into consideration before “real-time” reporting becomes a reality.

The ACCA report, ‘Understanding investors: the road to real-time reporting’, explains that, for internal management teams, “real-time” data analysis is “becoming a reality” but notes that, for an investor, they are still only able to access “periodic” corporate reporting information in line with the defined reporting cycles of companies. The report comments that this periodic information is not enough to satisfy the needs of the investors who “want companies to provide greater transparency and a faster flow of information”. The report identifies that companies are already coming under pressure from regulators and investors to speed up the reporting process.

Results of the survey of 300 investors and “leading figures from the investment community” highlight that there is a demand for companies to disseminate information “in a continuous manner, rather than at set time intervals, as at present”. The report comments:

A move towards real-time reporting would increase investor returns and enhance the level of confidence in corporate reporting. Companies that provide information on an “as needed” basis would be perceived as having better corporate governance and would attract investment more easily.

The key findings of the survey were:

  • 85% said that real-time data would improve their ability to react quickly.
  • 78% believed that 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% said it would increase their understanding of corporate performance.
  • 70% said that companies reporting in real time would have an advantage in attracting investment.
  • 65% said it would reduce costs of doing business with such companies.
  • 51% said it would increase liquidity in financial markets.

However, against these benefits to investors, the report also notes a number of investor concerns with “real-time” reporting. Two-thirds of investors believed that real-time reporting “would create further financial instability and lead to an increased tendency to short-termism in financial markets” and the majority of those surveyed believed that it would “lead to an increase in market volatility”.

Additional concerns are raised in the report that “real-time” information may not be as reliable and accurate as it will be “raw” and will not have gone through “lengthy review” and other assurance processes. The report comments that as information is required at a faster rate it will impact upon the assurance processes that can be carried out which, by their nature, are provided to instil confidence that the information being reported is [materially] accurate and in accordance with accounting standards. Results suggest that investors require different levels of assurance depending upon the type of information commenting that “investors are more likely to express a strong preference for assurance over speed when it comes to general financial information over liquidity” but faster information “when it comes to emerging opportunities and, to a lesser extent, profit warnings”.

The ACCA comment that “a trend to faster closing will be difficult to resist” but there are a number of challenges that must be met, not least the debate of speed versus accuracy, before it becomes a reality and the gap between internal operational reporting and external investor reporting shortens.

Click for the press release and ACCA survey ‘Understanding investors: the road to real-time reporting’ (links to ACCA website).

The two earlier report in the series, Understanding investors: direction for corporate reporting and Understanding investors: the changing landscape were published in June 2013. Not part of the series but also investor focused is the ACCA survey What do investors expect from non-financial reporting? published in July 2013.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.