Thursday, November 27, 2008

Strengthening quarterly disclosure

In India, firms put out very poor information each quarter [example]. Quarterly disclosures in countries like the US are much better [example]. A few days ago, Mahesh Vyas had written about the need for better quarterly data, that would enable understanding the economy better in turbulent times such as this. Today, Jayanth Varma has written a column in Financial Express urging improvement of quarterly disclosures. I disagree with him on doing only 500 companies. Any large firm has the computerised accounting systems to do this. We should cover all listed companies right away.

2 comments:

  1. As suggested, its always makes sense to have all the companies to disclose more. But unfortunately the authorities seem to be interested in "simplifying" disclosures, which simply means hiding more of what you were earlier supposed to disclose.

    Second issue is that many of the reporting formats as mandated by regulators fail to actually give the real picture for the laymen who need to understand it more.

    Something substantial needs to be done on that front too.

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  2. Yes. I think the formats were designed when CCI (controller of capital issues) was in existence. Ex., we rely on debt/equity figures as of last balance sheet, while firms go around carrying on their borrowing/equity activities which, unless we are insiders or participants in the markets, come to know only after 1.5 yrs (at the time of the next balance sheet).

    Of course you will receive some notice for postal ballot in some cases, however for an intending investor, these vital info is never evidently available, unless he takes pain in searching for it.

    There is a serious need for improvement on disclosures and also on adoption of IFRS, which is presently targetted for 2011, the same can be adopted mandatorily by 2009-10 for large firms, based on enterprise size. As most of the companies have information systems based on computers with real time data, compliance of more info will not be a great burden/cost.

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