UK companies groaning under the weight of reporting requirements could let out a sigh of relief yesterday: the interim findings of the Kay Review into the country’s equity markets showed strong opposition to the practice of quarterly reporting, which now looks set to be abolished.
The European Union, which sets the UK’s overall guidelines for disclosure, is already thinking about lifting its obligation for quarterly updates. If it does, the UK will be free to change its own rules.
More significantly, the Kay Review highlights the need for a change in attitude toward reporting. The drive for increased transparency has led to more and more disclosure, regardless of whether that information is useful, it says.
The result is that companies waste time and money on reports the investment community doesn’t want. They also develop an unhealthy interest in pleasing analysts over the short term.
In the review, author Professor John Kay says the assumption that more information is always better sounds good in principle, but in practice is flawed. It’s about time the rules changed to reflect this reality.
By Tim Human
UK report pans quarterly reporting – Inside Investor Relations