Make firms report results promptly

Companies traded on the UAE's stock exchanges should be required to report their quarterly results in less than 45 days; some of the world's biggest, most complicated firms do it in under 30 days. But slow reporting is not the only problem in local markets.

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Requiring public companies to report their earnings more speedily each quarter, as proposed by some UAE fund managers, is necessary but not sufficient. The decline in trading volumes on the country's two main stock exchanges cannot be blamed on inconsistent reporting schedules alone.

And the decline in volumes has been dramatic in recent months. The Dubai Financial Market, for example, handled transactions totalling only Dh10 billion in the first quarter of this year, down from Dh28 billion in the same period the year before.

There's no doubt that speedy reporting is among the "best practices" so widely extolled in business schools around the world. By that standard alone, it is certainly a good idea.

There's nothing inherently too difficult about quick reporting - if a company is well-run. Barclays, the world's biggest corporation by assets, announced its first-quarter results for this year on April 27. ExxonMobil, a company of formidable international complexity, gave its first-quarter numbers the next day. Alcoa, the world's largest producer of aluminium, did even better, reporting its first-quarter results on April 11 - just 11 days after the quarter ended.

By that standard, the UAE's 45-day requirement for quarterly numbers suggest that some corporations suffer from inefficient internal operations.

Our Business section article yesterday mentioned the recurring problem of "erratic company price movements ahead of market-moving regulatory disclosures". That sort of trend certainly discourages investors from entering the markets here.

The thinness of the stock markets and the paucity of reliable information can be counteracted, to a degree, by the same oversight that much larger markets require to maintain the proverbial "level playing field".

Even the world's biggest and most sophisticated financial markets have been shaken by cases of insider trading, shoddy corporate supervision of employees and slapdash regulatory monitoring of whole firms.

For any market to succeed, people must have confidence that they can get a fair deal. For the UAE, the proposal for shorter reporting periods represents a good start. In today's fast-paced economy, transparency delayed is transparency denied.