The Investment Association’s call for companies to stop quarterly reporting is being heeded, with the number of FTSE 100 and 250 companies issuing quarterly reports since October 2016 declining by 19% and 25%, respectively.
In a bid to discourage companies from engaging in short-term behaviour, such as managing the business to meet quarterly targets rather than developing their long term strategies, the IA called on companies to stop issuing quarterly reports and earnings guidance. This formed part of the IA’s wider Productivity Action Plan launched in March 2016 which aims to help boost UK productivity through long-term investment and enhanced investor stewardship.
Eighteen months since its launch, the Investment Association has completed over half the recommendations it set out for the asset management industry to take in 2016 and is on track to complete the remaining actions by 2019.
These include publishing Long Term Reporting Guidance, which sets out guidelines for company reporting on productivity, capital allocation and culture, and the creation of a Stewardship Reporting Framework to assist asset managers on reporting their stewardship activities. Both initiatives aim to help investors make better informed, long-term investment decisions and encourage companies to focus on the long-term drivers of value creation in their business.
Chris Cummings, CEO of the Investment Association said:
“The UK’s productivity puzzle is one of the biggest challenges of our generation. Solving it is crucial to closing the gap with our major international rivals and to helping the UK become more competitive on the global stage.
‘Stronger, more productive businesses are more likely to deliver the long-term investment returns for the millions of people whose savings and investments are managed by our industry”.
Over the next twelve months, the IA will focus on delivering the remaining recommendations in the Productivity Action Plan. As part of this, the IA will look to develop best-practice guidance on how long-term investment principles can be better incorporated into investment mandates, as well as developing a standard approach across the asset management industry for calculating average holding periods.
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Notes to editors
To view the Productivity Action Plan Implementation Update, please visit the IA website here
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