Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Wednesday, September 06, 2006

Summer’s over – a new harvest of research on IR topics

During the summer months of 2006, while we (in theory at least) were relaxing, the research firms have been very busy investigating and analysing themes that impact our day jobs. Topics range from XBRL – which the SEC is determined will be adopted – to narrative reporting.

However, first lets look at MiFID. Sounds like a refugee from the John Wyndham novel? No. Among other things, the European Commission’s Market in Financial Instruments Directive has the potential to create new trading options for companies. A group of 10 banks is aiming to take on the LSE in creating a market for your equities. The banks are said to be taking advantage of MiFID, which no longer requires banks to report their trades to a local exchange - although they still have to report them somewhere. 2 consultations were launched this month, asking your opinion on all this.

Back to narrative reporting; PWC published an interesting study (only in German, sadly) with the provocative thesis that focus on long term corporate goals in investor communications brings more certainty and development opportunities for listed companies. The companies in question are Swiss, but the principle holds true for all. And according to another new study (from NYSE) rebuilding reputation is among the top concerns for CEO’s.

And the SEC’s introduction of rules on the disclosure of compensation plans for US executives, offers the prospect of measurable targets being required from US companies – which gives insight into their strategies, and perhaps restores transatlantic equilibrium after OFR.

Speaking of which, still more surveys now show that the earlier reporters in the year, are staying true to the requirements of OFR, even though they not strictly required. Whether this is because they were in the plan anyway (after all that preparation), or companies were influenced by the pension funds’ letters to their Chairmen, or simply that BR’s are not that different from OFR’s, is not clear.

And with the world focussed on climate change, the Worldwatch Institute – more research – has noted that while corporate sustainability reports are on the rise, many of them lack transparency, details, and long-term goals, making them of questionable value.

And so back to the SEC’s focus on “interactive data”. 2 announcements show how serious they are. Its annual Forum on Small Business Capital Formation will focus on the advantages filing interactive data with the SEC can give smaller public companies. So now all we need is some tools to analyse XBRL…… Enter the second SEC announcement – it has plans for its own Web tools that will let investors and analysts exploit interactive data to analyse mutual fund and corporate information.

So that’s the summer’s headline research – all we need now is time to read it.

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