The Straits Times / The Business Times News on OSIM

Quarterly reports: bane or boon?

Should the current requirement for quarterly reporting be reviewed? If so, what factors should the government consider in its review?

I AM certainly for the review of the quarterly reports which are so excessive and a waste of time, money, and effort for listed companies. It adds nothing to the transparency that half yearly and annual reports already do.

As it is, listed companies are already required to announce immediately on Masnet any news and developments that have a material impact on share price. Shareholders are thus already kept fully updated on information that they need to make investment decisions under the current system. Quarterly reports add nothing.

Quarterly reports, in fact, cause more damage than just wasting time and money for listed companies. This is because they foster a dangerous culture of short termism. They make executives look towards boosting short-term results and ignore strategic actions that may not look good in the short term but are necessary for the long-term well-being and success of the company. Quarterly reporting could also be a factor in pushing company execs to 'manage' their results so that the share price is not punished.

It is such a waste of time for the CEO and key management to concentrate on quarterly performance which takes up so much of management's time, and it really makes everyone so myopic and short-sighted that it is like asking politicians to stand for election every year.

Must we follow every rule in the US, when they have more than 5,000 companies? What is the real merit in these quarterly reports? Do they really make us any more transparent or do they only add more time, effort and cost in doing something that might not be prudent?

It is far better to suggest that companies report their results half yearly within 30 or 45 days. Government bodies should consider that it might be worthwhile to make it voluntary rather than mandatory. Those who are ready might want to do it and those who don't can do it half yearly.

Considering the size and the merits of the exercise and the reputation of Singapore, we should try to define it in the best way for our economy in the context of transparency. Corporate governance is not about more rules but responsibility. Investors understand that the key considerations in investing is the quality of management and their clarity of goals and their execution.

- Ron Sim
Chairman & CEO
Osim International