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Legal & General to stop quarterly reporting

The UK’s biggest asset manager Legal & General will no longer give its shareholders quarterly updates on its financial performance, arguing that the frequent reporting promotes short-term thinking. The financial services giant will instead give “timely and frequent updates,” as well as full-year and half-year reports to investors.

Crawford Spence, Professor of Accounting at Warwick Business School lauded the move: “Although the requirement to produce quarterly financial reports for shareholders was relaxed in 2014, very few organisations have been bold enough to stop doing it. This is no doubt because of the fear of shareholder backlash. That Legal & General have decided to do so is a very positive step.

“The notion that we need more transparency and more accountability all the time has not produced better quality information, as was hoped, but only led to the intensification of short-term pressure upon companies. In turn, this short-term pressure encourages dysfunctional decisions.

“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. “

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