THE UK’s biggest asset manager, Legal & General, has said it will scrap quarterly reporting next year in a bid to encourage long-term thinking among investors.
Legal & General will instead provide “timely and frequent updates” as well as half-year and full-year reports.
“Making this change will help management and the board make the right long-term decisions in the interests of all our stakeholders,” said Nigel Wilson, L&G group chief executive.
“Our business cycle is long-term, with many of our investment and business decisions playing out over years and sometimes decades, rather than quarters. As such, ending quarterly reporting will allow us to focus on communicating what is relevant to the value creation in Legal & General’s businesses.”
Last year, Legal & General Investment Management, one of the largest investors in UK plc, wrote to the boards of the biggest 350 listed companies, urging them to end quarterly reporting.
Crawford Spence, professor of accounting at Warwick Business School, said very few organisations have been “bold enough” to stop giving shareholders quarterly updates because of the fear of an investor backlash.
“That Legal & General have decided to do so is a very positive step,” Spence said.
“Managers in big companies are often seen as the bad guys in the modern world, but they often only behave erratically because of the unrealistic demands placed upon them by shareholders.
“If management were given more time and room to develop long-term visions and strategies for companies then we would perhaps live in a more stable and less volatile and crisis-prone economic environment. Sensible company reporting has a role to play here too.”