LEADING PORTUGUESE businessmen were told how to improve the running of their companies recently and prepare for the routine of quarterly reporting.
At a PricewaterhouseCoopers and AESE (Escola de Direcção e Negócios) conference, 400 delegates from companies such as Portugal Telecom, edp and Millennium bcp heard speakers Paulo Teixeira Pinto, executive president of bcp, and Manuel Alves Monteiro, president of the Portuguese Institute of Corporate Governance.
It was explained that there is increasing legislative pressure on the way that limited and plc companies have to be run, meaning they have to be more transparent at management level. While US corporations have long been used to the routine of quarterly reporting, it seems all listed Portuguese companies may soon have to report on this basis too.
In Europe, the EU Commission has issued a draft Transparency Obligations Directive that will require companies, whose shares are traded on a regulated market, to produce quarterly reports, which should, in theory, increase transparency and the amount of information available to investors.
However, it could, on the minus side, encourage lack of vision and delay some disclosure of relevant data until the quarter date arrives.
It has been alleged that the pressure to generate a continuous stream of increased quarterly profits to shareholders and investors contributed to the ultimate downfall of Enron and other corporate failures.
Regardless of the rights and wrongs, it seems that company management boards, audit committees, as well as auditors will have to get used to more frequent reporting and a key issue will be to understand the level of detail of information required at each period end.
But Internal Market Commissioner, Frits Bolkestein, believes it will foster better business practice and help restore confidence in capital markets, in the wake of the scandals that have shaken trust in some European companies, including blue chip ones.
It will strengthen shareholders’ rights, access to information, and protect creditors and employees, while making it easier for investors to compare investment opportunities.
By Chris Graeme
