Study on the current mandatory financial forecasts from the financial personnel's viewpoint
Dr. Chyan Yang
Due to the rapid growth of Taiwan economy and favorable government policies, the stock market continues to develop and has become an important funding source for businesses. At the same time, many investors use the market to invest and manage their finance. Therefore, whether there are adequate, public, and accurate information disclosures can profoundly affect the future development of the market. In 1991 the government began to enforce mandatory financial forecast in order to ensure that listed companies disclose information timely and adequately, and also to prevent listed companies from randomly announcing earning projections. Over the years, although the mandatory financial forecast requirement had undertaken a wider scope and various guidelines were set forth, the quality of the forecasts has always been questioned. Some people even suspect that certain companies use the forecasts to manipulate stock prices and facilitate insider trading. This study attempts to find out financial personnel’s viewpoint under the current mandatory financial forecast system in order to better understand the activities and intentions of the companies and their financial personnel when preparing financial forecasts. The result is then used to determine the quality of financial forecasts. As a result, the forecasts can be used more reasonably. Moreover, the government securities agencies’ better understanding of the companies’ thinking and difficulties when preparing financial forecasts can serve as references for future securities law amendments. This study was conducted by sending questionnaires to the financial personnel of publicly listed companies that make formal financial forecasts. Their feedback was collected, and their responses were analyzed . The analysis shows the following: 1.Most respondents are in favor of abolishing mandatory financial forecasts, allowing voluntary discloses of financial forecasts, simplifying the forecast financial statements and using a range instead of a fixed number when forecasting numbers, and having accountants reviewing the forecasts. 2.With regard to the special triggering events when a company is required to disclose financial forecast, most respondents agree that the forecast should be disclosed for the year when the triggering event occurs. 3.Most respondents reflect that the existing deadline and guidelines for updating financial forecasts are improper. 4.Most respondents use non-quantitative methods to prepare their financial forecasts. 5.About half of the companies have internal financial budgets which are different from their publicly announced financial forecasts. 6.Accountants should not prepare financial forecasts for their clients because their objectivity can be affected. 7.Upward financial forecast revisions are updated more timely then downward revisions. 8.Financial forecasts approved by the board of directors are not always more achievable. 9.Respondents think that the daily publicly announced price-to-earning ratios (PE ratios) can be abolished. 10.Most respondents suggest that relevant government securities agencies should set forth interest rates, foreign exchange rates, and stock market index numbers for companies to use as references when preparing their financial forecasts.
|Appears in Collections:||Thesis|