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Real-time Financial Reporting – Increased Expectation of Investors

Although the definition of real-time reporting vary, in effect the Real time means shifting from a process of making data available only at certain pre-established intervals to one where it is provided on an as-needed basis.  The technological developments had increased the level of expectations.  We expect to have the latest news and commentary available instantly, and are ever more intolerant of any delay.  Similarly, investors now expect real-time information from companies to help them to track prices of futures, options and stock prices in real time.                                                                                                              
Real-time Financial Reporting-min

A shift towards real-time reporting of financial information would have many benefits, according to investors.  Generally, it increases both returns and the level of confidence in company information and it would improve their ability to react more quickly.

Financial reporting involves the disclosure of financial information to management and the public (if the company is publicly traded) about how the company is performing over a specific period of time.  Financial reports are usually issued on a quarterly and annual basis.  This is different from management reporting, which is financial information that is disclosed to those inside the company to be used to make decisions within the company.  Financial reports are included in a public company’s annual report.

Financial reporting serves two primary purposes:

  • Helps management to engage in effective decision-making concerning the company’s objectives and overall strategies. The data disclosed in the reports can help management discern the strengths and weaknesses of the company, as well as its overall financial health.
  • Financial reporting provides vital information about the financial health and activities of the company to its stakeholders including its shareholders, potential investors, consumers, and government regulators. It’s a means of ensuring that the company is being run appropriately.

Demand for real-time information is likely to vary according to investor focus.  For longer-term investors, the prospect of real-time information offers no benefit at all, but, if you were to ask momentum investors whose livelihood is based upon high turnover and trading mentalities, they may well see the benefit in more and more reporting, because that provides further opportunities for trading activity and mispricing to occur.