SE chief urges listing link to better company reports

MICHAEL Lawrence, the new chief executive of the Stock Exchange, has suggested that its listing rules could be used to improve company reporting standards.

In a lecture in Aberystwyth, Wales, on Monday he said that listed and quoted companies could be required to incorporate operating and financial reviews in their reports.

Detailed proposals for these reviews have been drawn up by the 100 Group of finance directors, investors, City analysts and the Accounting Standards Board to try to extend the description of businesses in their accounts beyond straight financial data or chief executives' reports, which tend to highlight only the flattering developments.

The new reviews would give explanations of business issues, trends and factors affecting performance, the dynamics that drive the business forward, risks to which it is exposed, the means of financing, and Treasury management policies.

Mr Lawrence, a past chairman of the 100 Group, said the Exchange's approach had been to require information from companies and leave it to shareholders to take whatever action they wished.

He said: 'Could the Exchange not consider if it can take this approach further? Why should listed and quoted companies not have to produce an operating and financial review? Directors would have to focus more on the whole picture.'

Mr Lawrence believed it was more important to focus on the efficiency and direction of companies than on their internal workings.