A global survey of institutional investors commissioned by accounting automation software leader BlackLine, reveals that 79% of global investors believe that CEOs should be held accountable for a company’s financial reporting errors. Surprisingly, only 38% of investors feel that CFOs should be held to account.
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BlackLine commissioned independent global research firm Censuswide to survey over 760 institutional investors across the world to gauge investor confidence in their portfolio companies when it comes to financial data, risk and reporting. The findings reveal an increasing lack of investor confidence in companies’ financial practices. This lack of confidence leads investors to rely on executives at the top for reassurance, looking to CEOs and CFOs to ensure that better reporting standards are applied.
According to the survey, 63% of investors demand to know who is accountable if one of their portfolio companies misreports its finances. More than half of those surveyed added that they become frustrated when companies cannot communicate who is ultimately responsible for signing off on financial reports. Surprise disclosures or restated financial statements are viewed especially poorly, with 98% of investors revealing they would be adversely impacted if a company misreports its finances.
Investor trust is reduced further when reporting processes are not clear; 38% indicate that a lack of visibility over how financial data is gathered, checked or analyzed makes them doubt its accuracy. More than half (58%) of investors are increasingly concerned by this lack of transparency, pointing out that the status quo is not sustainable in the longer term, particularly in unpredictable and unstable economic periods.
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