A COMPANY'S financial statements are the most important source of information for investors' decision-making, say retail and institutional investors alike.
And audited financial statements are by far considered to be significantly more reliable than unaudited ones.
These were among the key findings in a report released on Thursday at the Singapore Accountancy Convention (SAC), organised jointly by the Accounting and Corporate Regulatory Authority (Acra) and the Institute of Singapore Chartered Accountants (Isca).
"Into the Minds of Investors" was commissioned by Acra and Isca, and authored by NUS Business School associate professor Mak Yuen Teen. It surveyed 33 institutional investors and 171 retail investors over the months of April and May.
It found that 94 per cent of institutional investors and 81 per cent of retail investors rated financial statements as the most important source for investment decision-making, compared to other information sources such as company announcements, one-to-one meetings, conference calls, analyst reports, and so on.
However, both groups of investors also said that the usefulness of financial statements, these days, is limited by too much aggregation of information, insufficient disclosures, and disclosures that are difficult to understand.
The study also found that investors place great value in an audit, with about five times more investors, in both groups, having confidence in audited financial statements than non-audited financial statements.
Having previously sought the views of directors and preparers of financial statements, regulators were keen to seek the view of investors. "As a key stakeholder group, the views of institutional and retail investors are important inputs in the shaping of regulatory initiatives for Singapore's financial reporting landscape," the study said.