When I was a schoolboy, which was many moons ago, I remember my school mates and I were subjected to regular class tests. We were told well in advance when we would be tested on each subject. So, we had plenty of time to prepare.
I don’t think a great deal has changed over the years.
For teachers, it was useful to gauge how well the class was doing. For us, students, it was useful to find out the areas that we were weak in and needed to put more effort into.
Question is whether these tests are worth the effort for everyone.
Good students would probably find them unnecessary distractions. They would probably prefer to push ahead with the syllabus. Bad students probably don’t really care either way.
So, what does this have to do with investing?
From 7 February, companies listed on Singapore Exchange will no longer be required to file quarterly reports, unless there are regulatory concerns with them. It will bring Singapore into line with the UK and Europe, where quarterly reporting was shelved in 2014….
…. the US still requires quarterly reporting. It has done so since 1930.
But what does this mean for investors?
Companies will still be required to file semi-annual reports. And if Singapore companies should follow the lead by some UK companies, then they might still go the extra mile and provide trading updates to keep investors in the loop.
But it does mean that companies won’t feel the need (or the pressure) to manage their numbers to meet short-term analyst expectations. Cynics call it massaging the numbers.
It could also mean that they may not feel the need to repurchase shares to artificially boost stock prices….
…. Instead, they could deploy the cash for more meaningful long-term projects.
For investors who buy and hold shares for the long term, the move from quarterly to semi-annual reporting shouldn’t make any difference provided we invest in good companies.
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Disclosure: David Kuo does not own shares in any companies mentioned.