Much to debate over quarterly reporting

Pedestrians walk past an electronic screen and ticker board that indicates stock figures at the Singapore Exchange Ltd.
Pedestrians walk past an electronic screen and ticker board that indicates stock figures at the Singapore Exchange Ltd. PHOTO: BLOOMBERG

Some observers say retail investors may still need them; others say they will not miss them

Some developed markets have done away with quarterly reporting but the time may not be right for Singapore to follow in their footsteps, observers say.

They contend that while professional fund managers and institutional investors have the skills to analyse companies without these regular reports, retail investors would lose out.

Britain and the European Union last year waived the quarterly reporting requirement, while in Hong Kong, quarterly reporting is compulsory only for firms listed on its junior board.

Singapore might just be going in a similar direction. The Singapore Exchange said last week it has set up a team to look into whether the local market still needs quarterly reporting.

Athenaeum managing director Madeleine Lee will not be among those who would miss such reports. In fact, she does not even keep track of whether the Hong Kong-listed companies her fund invests in report quarterly financials or not.

"We do look at quarterly reports when available but we are not fixated on them. They add to our total, long-term view of the company. If you were led by the nose by quarterly reports, then you're not doing your job as a fund manager. Fund managers should do their own analyses and forecasts," she said.

Ms Lee said a half-yearly report would provide enough guidance on a firm's performance.

However, veteran private banker Anuj Khanna said that quarterly reports offer a good view of a company's progress and can sometimes throw up warning signals.

However, he noted, "the pendulum has swung to one extreme because that's all we look at. The biggest criticism of quarterly reports is that everyone is guided by only that and nothing else, and the market rewards short-term performance over long-term strategy and execution".

Still, Professor Lawrence Loh, the deputy head and associate professor of strategy and policy at National University of Singapore Business School, is firmly on the side of maintaining the quarterly reporting requirement.

"The fundamental issue is: Where would investors get their information from? It's important to have information readily available and well-assembled for them. If we did away with quarterly reporting, it would be quite difficult for many investors to get the right information."

There have also been calls to make quarterly reporting dependent on a company's size, though the arguments cut both ways. Some say only big companies should be made to report their numbers every three months, while others argue that only small companies should be made to do so.

To Prof Loh, both are arbitrary lines drawn in the sand.

"There are those who argue that the cost and burden of quarterly reporting is why we should do away with it. In that case, big companies with their resources should not have a problem meeting this requirement," he argued.

"And as for small companies, they are already not well-known and it can be very hard to get information about them. So, if they no longer have to report quarterly figures, there would really be a vacuum of information."

And with markets so volatile now, investors need all the information they can get their hands on, he added.

Grandtag Financial Consultancy chief executive Ben Fok agreed, saying it is not the right time for Singapore to do away with mandatory quarterly reports.

"It depends on the maturity of investors. In Hong Kong, retail investors are more mature and tend to track the market daily, but Singapore investors have not reached this point. We are still some years away from that," he said.

EY assurance partner Tan Seng Choon added that quarterly reports offer a good back-up to ongoing disclosures by listed firms.

"If the board (of the listed issuer) exercises due diligence and sound judgment in ensuring that price-sensitive information are shared on a timely basis, the need for quarterly reporting will be reduced."

However, if the board is remiss, quarterly reporting provides a back-stop measure, he said.

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A version of this article appeared in the print edition of The Straits Times on February 02, 2016, with the headline 'Much to debate over quarterly reporting'. Print Edition | Subscribe