Mark Hynes - thoughts on corporate disclosure

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

Monday, December 29, 2008

Looking back- and forward!!

Out of curiosity I just had a quick peek to see what I was writing about this time last year. One thing’s clear – I didn’t predict the scale of the crash – but then few others did either. Mind you my December 07 post did use the word “crash” but that was to highlight the potential of the sovereign wealth funds to save the world...

I also wrote about how hedge funds were planning to self regulate and increase transparency. Another world, isn’t it? With talk of disappearing hedge funds, and increasing mandated regulation, self imposed rules seem a relic.

And in January, TM looked at 2008 as the year of XBRL. Not a bad call, with its adoption by the SEC and other regulators, and I think the roll out by regulators will continue. What price mandated XBRL filings in Companies House for public companies within 3 years?

So to 2009. It’s a brave man who cares to predict at all. Public company Directors are casting around for ways of accurately forecasting next year. However some things appear inevitable. The increased focus on debt, with companies "reversing" their investor presentations and discussing their credit arrangements first, and their growth story second. And with pressure on Directors to confirm their ‘going concern’ status, annual reports will include greater levels of detail of debt schedules, the cost of renewal.

Risk analysis will also be a subject of focus. The rather formulaic descriptions of the processes used to identify risk will likely be replaced by work initiated by Audit Committee to instil a much more risk averse structure in to businesses.

And corporate responsibility will become an ever greater focus. It may seem counter intuitive, with investors on hunt for maximum returns, but their interest in corporate governance standards, in climate change exposure and supply chains has increased.

One other theme I suspect will emerge in terms of IR controls, is the increase in investors’ use of dark pools. With their arrival in Europe post MIFID, dark pools – private crossing and non-quoting sources of liquidity – have been growing as institutions seek to hide and disperse order flow and to reduce their market risk impact.

US securities firms and their clients are expected to direct about 20% of their stock orders to dark pools by 2010, up from 17% this year. By their nature, dark pools are secretive, and IR’s can only see how their stock is trading at the end of the day, when the price may have moved very significantly.

So much to look forward to.

And finally on a personal note, I wanted to say that as of January 1st I am a fully independent consultant ( offering training and thought leadership. On that note, Happy Christmas and Holidays to all and best wishes for the New Year.


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