The FTSE 100 companies are not being sufficiently transparent about their financial affairs, business analysis expert Metapraxis has warned.
According to Metapraxis, the quality of financial information being provided in CEO statements for the UK’s top 100 businesses is steadily decreasing. For its research, it examined the companies’ annual statements and investigated the proportion of measurable, forward-looking data provided by chairmen and CEOs over a five-year-period. In total, there was a 49% decrease in the quality of information provided by the CEOs of telecommunication companies, a 23% fall in the basic materials sector and a 32% drop in the consumer goods arena.
But in more regulated industries, such as utilities and oil and gas, companies are starting to meet shareholder demands for greater clarity on expectations for future performance with the proportion of quantifiable, forward-looking data rising by 20% or more.
Commenting on the analysis, Simon Bittlestone, managing director at Metapraxis, said: “As businesses continue to compete for investment in a challenging economy, shareholders are increasingly relying on access to forward-looking information to help minimise the risk surrounding their investments and maximise their return. However, the majority of CEO statements continue to be based on historical data as management teams seem reluctant to commit to future predictions.”
Metapraxis analysed the chairman and CEO statements of FTSE 100 companies between the financial years of 2006 and 2011.
Sally Percy is editor of The Treasurer