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 investors can still only access periodic corporate reporting information in line with the defined reporting cycles of companies. 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 key findings of the survey of investors were:
- 85% say that real-time data would improve their ability to react quickly.
- 78% believe 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% 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% say it would increase liquidity in financial markets.
However, against these benefits, two-thirds of investors also believe 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 believe that it would “lead to an increase in market volatility”. Additional concerns were raised 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 thus making it less probable that the information 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”. However, the want 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.