Mark Hynes - thoughts on corporate disclosure

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

Wednesday, December 13, 2006

Crystal ball gazing ….again

As is traditional at this time of year, bloggers try to see into the future and predict some trends. As I am out on vacation shortly, I get to go first. So here goes:

The debate on US competitiveness will run and run. This has been caused by a severe fall off in the number of new listings on US exchanges, with losses to European exchanges, notably AIM. Pressure is mounting for SOX particularly to be ‘eased’. I believe this to be unlikely, at least in the short term, within the next year. Too much credibility, lack of evidence of connection between regulation and listing deterrence, and the limited time it has had to bed down, for me preclude any immediate changes. In the longer term now, that’s a different story.

For UK companies, the new Companies Act 2006 will be implemented by degrees. The opportunity to move to electronic annual and other reports will be seized very slowly. Even though there are potential cost savings, issuers – especially the larger ones with most to benefit – will approach this cautiously, concerned with the PR impact. And I doubt that many will be relying on safe harbour protection in the UK, to issue more forward lookinmg information than they already do.

On this second anniversary of the London Stock Exchange being ‘in play’ it is hard to see how change will NOT have happened. Probably the only certain thing in this game is that global consolidation will occur. You can argue the case for a transatlantic triumvirate of NYSE/Euronext, NASDAQ/LSE and Deutsche Boerse/ pan Europe exchange. Whether this makes it easier to attract liquidity is doubtful.

The Transparency Directive will have been implemented by most EU states. The qualification is because there are several even today who are delaying the implementation, due on January 20th 2007, until June or beyond. The good news for issuers is that, in terms of meeting the dissemination requirements, some heavy cavalry is coming the their help. Euronext has strengthened its offerings with the acquisition of Hugin from the Nordic area. OMX has announced its own services, and an alliance with PR Newswire. For its part, PR Newswire has just announced its tie up with Les Echos to offer French listed companies disclosure solutions. And Business Wire is open for business. Together these – and other - providers will be competing to win mandates from issuers. TM considers that quality will tell, and vendors interpreting the new rules literally, and not in compliance with the spirit of the obligations will lose out.

Corporate reporting will be the new theme for 2007. CSR/ SRI, real time reporting, narrative reporting, tagged data…all will be hot topics during 2007.

I must make a note to look at last year’s predictions….

Happy holidays.


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