Japanese Government to Abolish Quarterly Disclosure Rule to Reduce Work
The Japanese government has decided to abolish mandatory rules for listed companies to release quarterly financial reports to eliminate duplicated work, as similar disclosure is requested by stock exchanges, sources familiar with the plan said.
The government aims to revise the compulsory quarterly disclosure for about 4,000 listed companies by submitting to the parliament a bill to amend the financial instruments and exchange law as early as next year, they said.
Currently, listed companies are required to provide audited quarterly financial statements to the government as well as disclose earnings results every three months based on stock exchange rules, but there is overlap in the content of the market announcements.
Under the current law, companies are penalized for making any false statements in the quarterly financial reports. The stock exchanges rules, however, have no penalty, as earnings reports place importance on timely disclosure.
Financial services minister Shunichi Suzuki presented the plan to abolish the mandatory quarterly disclosure at a government meeting last Tuesday.
While removing the current duplication of work, Suzuki explained that the government plans to promote the disclosure of nonfinancial information, such as how much investment will be made in human resources.
The Financial Services Agency, which will be in charge of the disclosure system, is considering still requiring companies to submit financial reports every six months after the abolishment of the quarterly disclosure.
The FSA also plans to encourage stock exchanges to expand the scope of contents to be covered by earnings reports, so that the revision will not be perceived by investors as a retrograde step.
Britain and France removed compulsory quarterly disclosures in 2014 and 2015, respectively.
The move to scrap compulsory quarterly disclosures came as part of efforts to promote a "new capitalism" advocated by Prime Minister Fumio Kishida by addressing the so-called "short-termism" in which companies prioritize market-pleasing profit figures at the expense of investing in sustainable growth.
However, it remains unclear whether removing the disclosure obligation based on the law will lead to a change in company behavior, as firms still have to provide quarterly results as requested by stock exchanges.
(Source: Mainichi)
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