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Eversheds comment: Abolishing quarterly reporting to give real value for shareholders

  • United Kingdom
  • Global

    21-03-2016

    Commenting on news that the UK’s biggest institutional investors are to demand FTSE 100 companies stop quarterly reporting, Robin Johnson and Aleen Gulvanessian, corporate finance partners at Eversheds, say:

     

    “The Investment Association is an influential trade body that, within the context of best practice corporate governance and reporting, is looking for companies to move away from immediate short-term numbers to longer-term sustainable growth or value strategies. This is consistent with the desire to have more performance-related remuneration structures for senior management based on a company’s long-term strategy.

     

    “It makes sense for companies to focus on what gives shareholders real value. Quarterly reporting is time-consuming and that time could be better used on quality shareholder interaction. There has been a danger that, in reporting, companies give a snapshot of now rather than focus on the longer-term strategy. Institutional investors will react to short-term news, but increasingly are looking to hold investments for value growth and yield. Understanding how companies intend to provide that longer-term picture is missing from some reporting.

     

    “For wider stakeholders like employees, suppliers, customers and lenders, as well as communities in which companies are based, bringing focus to investment strategies and long-term capital requirements could give more welcome visibility and may make boards spend more time on the longer-term needs of the company, rather than immediate numbers.”

     

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