Listed firms barely explain earnings swing
Most listed companies do not explain if their quarterly earnings see any significant rise or fall in their periodical reports in a breach of rules, keeping investors in the dark until the annual reports come out.
Many companies do not even give the explanation for the deviation in their annual reports.
But according to the Listing Regulations-2015, in case of significant deviation in any parameter such as earnings or net asset value, between the quarterly periods, the issuer of listed securities shall provide reasons.
Earnings of 123 companies out of 328 listed on Dhaka Stock Exchange (DSE) deviated more than 50 percent year-on-year in the first quarter this year, data from the premier bourse showed. But no company has come up with any explanation.
“We don't find any explanation on the deviation of a company's EPS or any parameter,” said Minhaz Mannan Emon, managing director of BLI Securities.
But investors need explanations so that they can take good decisions, he said. Also a director of the DSE, Emon said he would raise the issue in the board meeting of the premier bourse.
Khairul Bashar Abu Taher Mohammed, secretary general of Bangladesh Merchant Bankers Association, said when a company gives its quarterly report, investors buy or sell its shares on the basis of EPS deviation.
He said despite remaining in the dark on the reasons for the EPS fluctuations, investors continue trading shares. As the reports are not audited, investors are affected in the absence of explanation, said Taher, also the CEO of MTB Capital.
“Regulators should take initiatives so that listed companies provide the explanation through the DSE.”
Market analysts said some companies organise earnings call, a meeting to publish quarterly reports, to address reasons behind a deviation and inform investors about the situation of companies. “But the number of the companies is only 10-12,” he said. KAM Majedur Rahman, managing director of the DSE, said, “It's a part of corporate governance too.”
He said companies should give explanation to investors about the reason for any deviation. “If they don't follow the rule, we have to take initiatives from the regulatory end.”
M Shaifur Rahman Mazumdar, managing director of Chittagong Stock Exchange, said the culture of explaining deviation has not developed yet. “We will work on it as it will be helpful for investors.”
Mazumdar said whenever the CSE finds a massive deviation, it verifies documents and sends queries to companies.
“If we find that the companies have given any inaccurate information, we inform the investors. But if the EPS rise or fall is driven by whether the company is doing good business or not, we don't notify the investors.”
Quarterly reports are published through the exchanges.
Saifur Rahman, spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), said stock exchanges should take initiatives first as they are the primary regulator and the listing regulations also permit it.
If the initiative does not produce any fruitful result, the exchanges can inform the BSEC, he said. “Then we will take steps,” he added.
Source: https://www.thedailystar.net
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