Good financial reporting raises shareholder value

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

02 Sep 2007

The Association of Chartered Certified Accountants (ACCA) in collaboration with CFO Asia Research Services has published the report of a survey of business opinion in Asia Pacific on the impact of regulation on companies and their shareholders.

One-hundred seventy-six senior finance executives responding to the survey in China, Hong Kong, Malaysia, and Singapore have, on the whole, a positive view of regulation, with nearly 60% reporting that it enhances shareholder value. Less than 25% believed it hinders economic growth. Overall, most felt regulation allows more, not less, focus on strategy.

A key finding was that "three types of rules – financial reporting standards, tax regulations, and stock exchange regulations – are viewed as the most helpful in creating shareholder value". The study also found that "regulations create a level playing field for businesses, but only when they are mandatory and enforced consistently".

"Some areas of regulation and disclosure are believed to be more beneficial than others. The introduction of IFRSs has been seen widely as a success story, adding value to the Asian capital markets by creating easy comparability for Western investors and by allowing a flexible, principles-based approach. The downsides reported were unsuitability to small enterprises and a lack of local context for countries such as China."

The press release for the report of the study, titled A Critical Connection: Making the Link Between Regulation and Shareholder Value, can be found on the ACCA Website (PDF 1,041k).


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