A Survey Conducted by the ACCA Indicates Investors Want "Real Time" Reporting
The third report in a 4-part project undertaken by the Association of Chartered Certified Accountants (ACCA) has been issues. The project was undertaken to understand the demands of investors about corporate reporting. A survey was carried out to gather comments and feedback of investors about their views on real-time corporate reporting. The survey found out that there was a high demand for real time corporate reporting among the investors.
The ACCA's report Understanding Investors: The Road to Real Time Reporting highlighted that real-time reporting for the internal management is becoming a reality but the investors still only have access to periodic corporate reporting. 300 investors participated in the survey and they said that they want the companies to provide information in a continuous manner instead of at periodic intervals.
The most important finding of the survey included:
· 85% investors believe real-time reporting will help them in reacting quickly
· 78% said that real-time reporting will increase returns on investment
· 75% were willing to pay more for real-time reporting
· 73% considered companies reporting on a real-time basis to have more robust corporate governance
· 71% believed real time reporting will increase their understanding of company's performance
· 70% said more investors will be attracted to company's who report on real time basis
Despite the above benefits, two-third of the participants said that real time reporting will create financial instability and increase tendency to short-termism. A majority of the investors believed that it will increase the volatility of the market. Many of the participants said real-time reporting will not be reliable because it will not have gone through review and assurance processes. Due to lack of review and assurance processes, real-time reporting is more likely to have material inaccuracies, and might not be in accordance with the accounting standards.
The ACCA commented that investors want faster reporting but before the real-time reporting becomes a reality, certain challenges will have to be overcome (for example the Speed Vs Accuracy debate).