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Legal & General calls for an end to quarterly reporting

ONE OF THE WORLD’S biggest asset management companies has urged businesses to stop quarterly reporting and focus more on the long-term.

Legal & General Investment Management chief executive officer Mark Zinkula, made the plea in a letter to every board of every company in the FTSE 350 index that they should bring an end to reporting which “focuses on short-term performance”.

Such businesses should be embracing the tenets of a November 2014 change in UK law which abolished the need to report quarterly – a condition that only promoted “an excessively short-term focus by companies, investors and market intermediaries.”

Zinkula said:” As a major investor in the shares and bonds of UK listed companies, invested through both active and index funds, we highly value the communication that we have with management teams.

“For many businesses, we believe, reducing the time spent on frequent reporting could help management to focus more on long term strategies and articulate more on market dynamics and innovation drivers that will enhance their performance over time.

“Some companies have already chosen to discontinue quarterly reports and we are supportive of their actions.”

Providing quarterly updates added “little value” for companies operating in long-term business cycles, he added.

The legislative changes were made shortly after the Kay review which sought to encourage the adoption of a corporate culture that embraced the benefits of long-term approaches in business.

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