The Dogs of Fox Street – celebrating South Africa’s corporate finance sector and the people who built it
Ince is proud to be the publisher of The Dogs of Fox Street, a rollicking memoir by respected veteran banker Bernard Katz. Drawing from his 30 years at Standard Bank’s merchant banking business, the book takes its name from the street where the merchant bank was based in Johannesburg’s old mining and banking district. Much of the material – predominantly “good-natured ribbing”, as Katz would call it – is drawn from the five “Clots Club” speeches that Katz presented at the bank’s directors’ conferences.
Bernard has written a book filled with unapologetic humour and anecdotes – all about the people that he has admired and the quirky, colourful, interesting and outrageous idiosyncrasies of their personalities.
The Dogs of Fox Street is not just a book about finance. It’s a book about the people who have enriched and enlivened the lives of many South Africans. It’s a celebration of the characters who have made the corporate finance industry so interesting and dynamic over the years. It’s a tribute to the people who have taught us valuable lessons about life, business, and everything in between.
The memoir pays homage to the individuals who played a vital role in shaping South Africa’s corporate finance industry into what it is today. It serves as a reminder of the numerous corporate finance leaders who have achieved remarkable success, such as Phuthuma Nhleko, Kennedy Bungane, Peter Wharton-Hood, Gloria Serobe, and the bank’s current CEO, Sim Tshabalala. Moreover, the book portrays a distinctive period in merchant banking when transactions were more dependent on intuition than on a spreadsheet.
Ince has been a friend of the South African corporate finance sphere for many years, so it was only natural that we support Bernard’s book project – primarily because we felt that this book, in its small and modest way, serves as a tribute to the many people that have helped to build South Africa’s corporate finance sector into what it is today.
The Dogs of Fox Street is a humorous take on the world of corporate finance, and it’s not surprising that it has garnered interest from people who aren’t familiar with the history of South Africa’s corporate finance sector.
In Bernard’s own words: “Life is full of wonderful stories.” Whether it is his time at Standard Bank, which the book substantially draws from, or his sojourns at Brait, Anglo American, Fisher Hoffman Stride, and his own company, Laroki Corporate Finance, The Dogs of Fox Street is more than just a series of anecdotes. It is a reminder of how powerful human bonds can form – and last – in the world work. And this is worth celebrating.
*The Dogs of Fox Street is available at major bookstores, including Exclusive Books, and is also available on Kindle.
Image Gallery from the event
Disclosure keeps the capital markets healthy – and we need more of it, not less
By David McKenna – Chief Operations Officer of Ince Pty Ltd
Despite our innumerable economic challenges – from rising inequality, poverty and unemployment – South Africa is still regarded as the most advanced, diversified and productive economy in Africa. One reason for this is our open, and deep (relative to our continental peers) capital markets, which provide the much-needed capital that helps to fund new businesses and grow existing ones – helping to stimulate our economy.
The one often forgotten aspect is that the money that fuels our capital markets is not impersonal. This is money that belongs to ordinary people who, through their savings, pensions and investments, entrust financial institutions to invest on their behalf. This places an important responsibility for market participants to operate with the principle of openness fundamentally in mind.
Openness is the backbone of efficient capital markets
The JSE sets clear rules on how price-sensitive – or market-moving – information must be released to all in the market at the same time, usually through an announcement on the exchange. From time to time, companies come under fire for disclosure missteps: sharing information with a select group of participants (rather than everyone) or not sharing enough information at the right time.
All of this points to the principle of openness as the golden standard. Openness – about operational and financial data, challenges and prospects – provides any company’s stakeholders with the comfort that their interests are safeguarded, and that the company is being run with the highest corporate governance standards in mind.
Simply put: our capital markets cannot function without a spirit of openness, which is so essential to building trust. This is a key ingredient that determines whether a retail investor buys or sells a share, or whether an institutional investor takes a position on behalf of their clients. Openness facilitates fair market activity: the more open a company is about making the necessary disclosures, the better the outcomes are for the broader market.
Market disclosure should therefore not be seen as a burdensome exercise, but rather, as a tool for listed companies or issuers to build greater trust and affinity with their stakeholders. The current trend of delistings on the JSE – and the overall slow listings environment – create an even more need for companies to demonstrate this spirit of openness now more than ever. There is a risk that as more companies delist, and fewer list on the JSE, public disclosure will become the preserve of only a handful of large companies and issuers. This is a risk that we cannot afford. Promoting disclosure as a public good that benefits all, rather than a nice to have, is imperative.
In this regard, it is important to also note that the need for adequate and useful disclosure is increasingly a business requirement for all types of issuers – be they private or public companies, or state-owned enterprises.
Smart technology can help build better disclosure
The rise of ESG, with a sharp focus on the metrics that prove the demonstrable impact that companies make to society and the environment more broadly, means that almost every business or organisation needs to consider how they communicate and disclose to their stakeholders.
In considering what we can collectively do to foster greater and more effective disclosure for the benefit of our markets, the role of smart technology cannot be underestimated. Over the years, we have witnessed numerous technological evolutions that have enabled companies to almost instantaneously share information with their stakeholders. Much of this technology is readily available, and used at varying levels, but the challenge is how to integrate these tools better.
The bulk of market communication — from public announcements on proposed transactions, release of annual financial reports or cautionary statements — are typically dense. In an information rich environment, an opportunity exists to use and integrate video, motion graphics and other tools to make market communication more dynamic and digestible. Thinking about how to better integrate tools, coupled with smart use of data and technology, provides us with an opportunity to promote better and useful disclosure in our capital markets. This is a task that each of us with an interest in building strong and open financial system cannot shirk.
David McKenna is Chief Operations Officer at Ince Pty Ltd. Ince is a investor marketing, digital and stakeholder advisory company helping clients — private and public issuers — connect better with stakeholders.
The Public Sector has a unique opportunity to build increased trust and accountability – now more than ever
Reflection on discussions with the Auditor General of South Africa
By Itumeleng Ndlozi, Executive Head of Ince’s Public Sector Division
We often hear the phrase “trust is earned” or “trust is the ultimate currency”. These brief phrases are packed with deep meaning – mainly because they express the value of trust in our lives: it is indeed earned and remains the ultimate currency of trade.
The origins of the word “trust” are fascinating. The word comes from the Latin term Fideicommissum, from the union of the words “Fide”, which means trust or faith, and “Commissum”, which means commission, together this translates as “a trust commitment.”
This means that trust is not only something we, as institutions, work towards building, but it is also a commitment we uphold.
In our work at Ince – as South Africa’s leading investor marketing agency advising the public and private sectors – we interact with many organisations who strive to build greater trust with the public, their investors, analysts, media and clients through increased transparency and accountability. This takes various forms: a detailed integrated report covering all aspects of an organisation’s performance or a digital solution that allows a large organisation to communicate complex issues with its stakeholders.
A positive development is that we consistently see how the pressure to be more accountable and transparent is coming from all stakeholders rather than a limited few. The rise of ESG investing in the private sector and several frameworks governing the public sector in South Africa and beyond – means we are all in the business of earning and keeping trust.
One shining example of how to lead the imperative to build greater trust and accountability is the Auditor General of South Africa, Tsakani Maluleke. Since taking up her current role last year, she has been working to find new ways to innovate how the public sector manages and accounts for taxpayers’ money.
One such innovation is the Auditor-General’s “real-time audits”. These are designed to “follow the money” as it is spent and report any audit findings and observations to the accounting officers or authorities concerned so that they can respond to shortcomings immediately. Ince recently had the pleasure of hosting a wide-ranging discussion with the Auditor-General, where we explored the continued challenges that exist in our public sector and how we can turn the tide.
The picture is stark. Take local government, for example. Municipalities are the first line of service delivery for millions of South Africans, but the downward trend in their finances means that they cannot provide the necessary services to advance development. Just last year alone, over R189 billion was recorded as unauthorised and fruitless expenditure by the Auditor General.
Only 28% of municipalities submitted quality financials for audit purposes, and just 11% received clean audits. A similar picture applies to many of our State-Owned Companies across the length and breadth of our country.”
But what is clear is that we cannot abdicate this responsibility to government alone. Working in partnership with the government, the private sector plays an important role in building and promoting a culture of trust and transparency.
No longer “business as usual”
A key insight from our interaction with the Auditor General of South Africa is that it can no longer be business as usual. At Ince we interact with organisations — in the public and private sectors — that have varied stakeholder needs and concerns. The one consistent thing that stands out is the need to build trust. This applies not only to South Africa but also to the rest of the globe.
An OECD study from December 2021 demonstrates how only 51% of citizens trust their governments. This has a number of implications: trust is the foundation for the legitimacy of public institutions, a functioning democratic system, and a thriving business environment. This is a collective responsibility that we cannot shirk.
Now more than ever, we need to find new ways of innovating corporate governance, accountability, and transparency. This is the work that we, at Ince, are passionate about.”
We believe that organisations, particularly those in the public sector, have an opportunity to find new ways to build greater trust and transparency. In our work, we have seen the value of using data to distil those issues that matter to stakeholders, bolstering this through integrated reporting strategies that go beyond compliance — but help build a better sense of openness.
The debate over how much transparency we should have often comes down to fights over ‘more’ or ‘less” — how open can we be about our challenges and opportunities, and how do we best report on these to our stakeholders: be they shareholders, regulators, or society more broadly. The shift to a more stakeholder-centric world, for business and the public sector, means that we need to find ways to speak to stakeholders in their own right to build greater trust.
The words of the Auditor General, Tsakani Maluleke, are instructive: “We should be all driven by a stronger purpose, other than the need to do our job. We are custodians of the dreams and aspirations of millions of our people. They put their trust in us.”
We, as Ince, stand ready to work with the public and private sectors to achieve this.
Contact us to learn more about how we can support your organisation.
InceTalks with the Auditor-General of South Africa, Tsakani Maluleke
InceTalks with the Auditor-General of South Africa, Tsakani Maluleke
On 10 March 2022, we hosted an InceTalks event focusing on how organisations can build trust through increased accountability. Our guest, Tsakani Maluleke, the Auditor General of South Africa, shared her reflections on the work of the institution she leads in finding new ways to innovate how the public sector manages and accounts for taxpayers’ money.
You can watch a recording of the conversation with the Auditor General, below:
Image Gallery from the event
New rules of communications
With so many unknowns, and no immediate end in sight, companies are scrambling to address the near and long-term effect Covid-19 will have on their businesses. They are having an equally difficult time determining the most appropriate and most efficient way to communicate with shareholders.
While communication tactics will vary, one thing is clear: this is not the time to stonewall, hedge or obfuscate; it is opportune for timely and effective contacts with shareholders. Investors are making tough decisions about which companies to buy, sell and hold. It is the job of investor relations professionals to provide a path for management teams to calm fear and instill shareholder confidence.
It is imperative for investor relations officers to take the lead, establish a sound strategy and run it flawlessly. In a market that is desperate for guidance and answers, and with investors eager to gain an edge, effective investor communications can make all the difference.
In the past, companies have typically been urged to issue news releases only when they have material or near-material news to report. It is the job of investor relations officers to enforce this policy and dissuade management teams from flooding the marketplace with unimportant press releases, in order to ensure that when ‘real’ news is issued, the investment community is paying attention.
Virtual investor relations
With investors in distress, at least temporarily, these rules have been suspended. More frequent distribution of news releases and shareholder letters or updates keep investors informed. It’s also a chance to move ahead of current as well as future questions, to control the narrative and, eventually, allow investors to make informed decisions.
Not surprisingly, the investor relations industry has quickly moved to a virtual investor relations (VIR) model as offices remain closed, business travel is non-existent and working from home has become the new norm. While certain aspects of VIR–including teleconferences, videoconferencing and webinars–have been around for years, traditional investor relations have historically been face–to–face interactions.
The evidence so far shows that VIR, especially videoconference calls, is working better than many could ever have imagined. The quality is great, even from home, and the cost is hard to beat, not to mention the ability to schedule these meetings on the fly.
The question becomes whether investor relations return to the status quo post-COVID-19 or has the function forever changed?
Over the near term, virtual-‘everything’ will dominate the investor relations landscape. Over the long-term, we will likely end up with a hybrid model. In any case, it’s a win-win for companies, investors and the investor relations profession.
Ince’s strategic approach to investor marketing and stakeholder communications offers an integrated suite of advisory, editorial, design and production services, all complemented by our powerful digital platform and our unique communication toolkit.
Our resilience as a business over our 104-year history means that we have learned to adapt to all the changes currently being thrust upon us during this time.
How to Sustain Strategic Stakeholder Engagement
With most of the world under self-quarantine, many aspects of millions of people’s lives – from family visits and birthday celebrations to conducting business – have changed and in many instances have become virtual.
Investor relations is no different. In fact, certain aspects have become more efficient and more cost-effective. Effective shareholder communications and, by default, the role of the investor relations professional have never been more relevant or necessary.
Here are a few things to note when preparing to engage with your various stakeholders.
Identify your audience
The first step to effective communication is clearly identifying your target audience. Who are the stakeholders you need to communicate with? Internal stakeholders can include frontline employees.
Establish clear communications objectives
It’s critical to understand the purpose of your communication. Are you trying to impart new information or are you trying to persuade the audience to take action? By knowing your goals, you can prepare your message and identify the right mode of communication.
Prepare your messaging in advance
Regardless of how informal your communication may be, it’s important to prepare before speaking to stakeholders. Take time to understand what critical information your audience needs to hear. This will help to ensure you’re communicating the right information at the right time.
Speak their language
Avoid using overly technical terms or industry jargon if your target stakeholder audience doesn’t understand it. Rather, use terms they are familiar with and comfortable using. This helps to reduce misunderstandings and clarifies your objectives.
Use the best communication medium for the job
Types of stakeholder communication include:
- Instant messages
- Emails, project management platform updates and other electronic communication
- Reports, slide decks and other shared documents
- Printed memos, handouts and notices
- Virtual meetings
- Phone meetings
- In-person meetings
Ince’s tech-driven innovations can assist with continuing business activities and investor engagement amid the coronavirus outbreak.
Ince’s strategic approach to investor marketing and communications offers an integrated suite of advisory, editorial, design and production services, all complemented by our powerful digital platform and our unique investor communication toolkit.
HTML: The Future of Digital Reporting
The integrated report is an oversight mechanism to improve governance and accountability. As such, it is imperative that this communication tool should be used to reach as many people as possible. How this is done has begun to change; what was formerly printed on paper is now published in the medium of this century: the world wide web.
According to a study conducted by German experts in digital reporting, nexxar, print runs have been reduced, with a decline of approximately 94% in some organisations.
Many respondents in the nexxar survey additionally forecast that their annual report print runs will decline significantly within the next five years.
The study shows a clear tendency towards digital reporting formats, of which PDF, the reporting standard XBRL and digital annual reports (HTML) are said to have the highest potential and importance. 59% of respondents even accept that in the future, reports will only be provided in a digital format.
It is evident from the results of this study that the importance of the reporting standard XBRL is showing the most growth. This comes as no surprise, since most respondent companies are obliged to provide parts of their annual report content (in particular the financial statements) in this new format by 2020.
In addition, people’s reading habits have changed. They want precise information – and they want it quickly. This means that important information must be accessible any time, from any place, on any device, easy to find and easy to consume.
Summary reports only prepare a short overview of the report “highlights” in HTML. The summary approach has one major problem: it does not keep in mind that users of annual reports are diverse. There are swimmers, surfers and divers of data. Some prefer an interesting presentation of data, while others want to really dig into the details. A good online annual report provides a solution that fits the needs of all stakeholders.
Nexxar’s research shows that most readers don’t want exclusively multimedia entertainment. When they open an HTML report, they are looking for comprehensive information, i.e. full disclosure of all annual report content.
Searchability and SEO
While PDFs are searchable, the quality of the results and the overall search experience is far superior in an HTML report.
With an HTML report, using a search engine such as Google to look for specific information from the report, takes the user directly to the site with the relevant content. When the report only exists as a PDF, the same search leads to the PDF, which needs to be downloaded and then searched again.
Interactive PDFs and Super Summary Pages, which many agencies claim to be the future of digital reporting, have their technical limitations and cannot offer all the features that people have come to expect in the digital era.
Only a full HTML report can meet the expectations of today’s digital audience: with interactive and multimedia content, easy navigation and mobile-friendly design, good searchability and options for social media sharing. That is why full HTML reports, and not PDFs or Super Summary Pages, are the future of digital reporting.
The importance of strategic stakeholder communications
The fast-changing nature of business has reinforced how important it is to understand the undercurrents of change that shape our world—and determine the success of a business strategy. Consequently, companies that anticipate underlying social, economic, technological, and political changes are positioned to win.
Communicating regularly with stakeholders can help with creating a positive understanding, ensuring that effective long-term relationships with key groups are built. A strong relationship with stakeholders brings a range of benefits, for example, communicating with customers can put you in a strong position when customers are making purchasing decisions.
Stakeholders are the people and organisations whose attitudes and actions can impact the success of a company. Stakeholders include employees, labour unions, suppliers, customers, business partners, investors and shareholders, the local community, government authorities and regulators.
Different stakeholders have different interests, attitudes, priorities and engagement needs. Effective communication ensures that they receive information that is relevant to their needs and builds positive attitudes towards a company or project. In this light, on-going consultation is generally used to track the progress of a company with regards to stakeholder expectations and to maximise buy-in.
Consistent, clear stakeholder communication helps with:
- Better understanding of your goals
- Creating influential and positive relationships
- Building a dialogue
- Influencing sources of power
- Stronger stakeholder relationships
Effective stakeholder communication includes listening to the opinions and beliefs of stakeholders as well as looking for their feedback. Inevitably, these are the people who will shape and influence future business successes.
This involves the nurturing of constructive and productive long-term relations. Stakeholder engagement aims to build associations based on mutual trust and benefits. Heeding to and understanding the views and feedback from stakeholders can help shape and improve the overall operations of a business.
The benefits of stakeholder consultation are clear, with some of the most significant reasons being:
- Enabling more informed decision making
- Leading to greater stakeholder satisfaction
- Improving chances of project/initiative success
- Promoting open, two-way communication
The Kellogg Company, the world’s leading producer of cereals, is an example of an organisation that takes strategic stakeholder engagement seriously. For more than 100 years, Kellogg’s has been a leader in health and nutrition by providing consumers with a wide variety of food products. Kellogg’s market-leading position and reputation are built on its commitment to ethical business practices and its values-based culture.
Kellogg’s uses a variety of strategies to maintain positive relationships with its stakeholders. For example, Kellogg’s commitment to its stakeholders and ethical practices is demonstrated through its Corporate Social Responsibility (CSR) initiatives. The focus here is on improving the lives of communities in which the organisation operates. Kellogg’s has identified four pillars to its Corporate Responsibility strategy:
- Marketplace ambition – meeting the needs of customers. Selling them safe, high-quality products whilst engaging in ethical and responsible marketing.
- Environment ambition – using scarce resources carefully whilst also reducing environmental impacts and supporting sustainable agriculture.
- Community ambition – contributing to the communities in which the company operates, concentrating on nutrition and physical fitness.
- Workplace ambition – supporting a talented and diverse workforce which values diversity and inclusion, abiding by best practice labour standards.
Kellogg’s business strategy is stakeholder-focused. The company’s decisions and actions are all made with the best interest of its stakeholders at the heart. Engaging with both internal and external stakeholders creates two-way communication that brings benefits to both Kellogg’s and to each stakeholder group. Although Kellogg’s engagement initiatives have huge cost implications for the company, they yield huge benefits to the communities and stakeholders as well as to Kellogg’s in order to demonstrate that it’s a responsible business.
Risks of overlooking the principle of consistent stakeholder engagement include:
- Lack of support: stakeholders become disillusioned with the project and withdraw support from the project.
- Cost: communication that is unclear or inconsistent leads to confusion and mistakes that must be remedied.
- Delays: overlooking key stakeholders such as the media or regulatory bodies or failing to spot changes such as suppliers being taken over, can lead to unexpected roadblocks and delay.
As understanding stakeholders becomes more and more important for businesses, stakeholder consultation will become a vital process to maximize success. Successful business outcomes and benefits realisation is grounded on good communication, which requires a good understanding of a company’s stakeholders, and regular reviews of the approach used when engaging with them.
Stakeholder consultation can be used to evaluate reactions and to track the perceptions of a company’s activities and ensure collaboration and partnership with all stakeholders. The long-term effectiveness of an organisation depends on its relationships with stakeholders, ensuring commitment and buy-in to any plans and challenges. This makes for a more informed organization that is responsive to the needs of all its users and stakeholders.
Ince is the leading investor marketing agency in South Africa, working to improve communication between companies and the global investor community. Ince has developed various platforms for the sharing of information to empower investors and prospective investors. Our platforms also make the communication process easier, all this to support the vision to create an interconnected community of informed contributors and a more inclusive investment ecosystem.
Partner with a company that puts the customer first, innovates to stay ahead of the game, and provides corporate South Africa with the very best information and creative solutions for all their reporting needs.
COVID-19 highlights the importance of ESG-focused investing
Climate disclosures and environmental sustainability issues have topped investor agendas lately. Indeed, investor demand for companies to measure, disclose, and explain their ESG credentials has become somewhat a norm. This development has come as a surprise to many business leaders around the world.
It’s been ascertained that good governance is a key element of corporate resilience. Researchers at HSBC have evidence of why ESG should matter to all companies that are interested in providing shareholder returns and, critically, proof of the defensive qualities a strong ESG regime can provide.
2020 has brought with it the greatest value destruction of equities since the 2008 financial crisis, unprecedented volatility in all asset classes, and huge government and central bank intervention in the capital markets.
Climate-focused stocks outperformed others by 7.6 percent from December and three percent from February. High ESG-scoring shares beat others by approximately seven percent for both periods.
Companies that are better able to withstand shocks, make the right decisions and implement their strategies amid chaos, seemingly show these qualities:
1. They have a tried and tested command and decision-making structure.
2. Risk management is at the center of that structure.
3. Adequate independent scrutiny and testing is the norm – from the board down.
The company’s place in society is fundamentally linked to its reputation and stakeholders: customers, employees, communities, policymakers, regulators, and investors, among many others. Firms that neglect their role in society are likely to find little sympathy in times of crisis – when they need it most.
Companies that are already taking material steps to reduce their carbon footprint are likely to be able to adapt best to a new world that insists on lower emissions and waste.
HSBC’s analysts have said that their core ESG conviction is that “issuers succeed long-term – and hence deliver shareholder returns – when they create value for all stakeholders: employees, customers, suppliers, the environment and wider society. When crises like COVID-19 manifest, especially with social and environmental causes and implications, investors can see ESG as a defensive feature.”
Once the coronavirus storm passes, companies will undoubtedly need to take a long, hard look at their ESG strategies.
Digitisation is Best Practice: The Case for Digital Reporting
Former Bank of Finland Governor and chair of the Trustees of the IFRS Foundation, Erkki Liikanen, has spoken on how digitisation and standardisation of business reports should offer productivity benefits – helping investors diversify and invest, and encouraging transparent, accountable, efficient markets around the world.
When it comes to investor relations, a website is one of the most crucial platforms a company should use to educate and engage clients about its offerings and in differentiating itself from its peers. Investors need to quickly identify and easily digest the company’s value proposition and performance metrics.
Research has shown a general tendency towards digital reporting formats, of which PDF, the reporting standard XBRL (and iXBRL) and digital annual reports (HTML) are said to have the greatest potential and importance. In fact, investor relations experts believe that in the future, reports will only be provided in a digital format.
In addition to this, in the digital era, user experience is of key importance – and research shows that a full HTML report with smart navigation and search functionalities is essential.
Only a full HTML report can meet the expectations of today’s digital audience: with interactive and multimedia content, easy navigation and mobile-friendly design, good searchability and options for social media sharing. It is for this reason that full HTML reports, not PDFs or summary pages, are the future of digital reporting.
The Right Thing
Although mainly a statutory information document, the integrated report should also serve as a communication and information vehicle. The report contains a lot of highly relevant facts, figures and background information on multiple topics. Reaching audiences with this content should be part of any company’s corporate reporting strategy.
Web accessibility is currently receiving a lot of attention. Accessibility is becoming a key compliance area, with the rise of legislation in recent years and the release of the international Web Content Accessibility Guidelines. Additionally, accessible websites have been found to reach a larger audience. They have greater visibility, because being web accessible also improves a website’s Search Engine Optimisation (SEO). Researchers and investor relations professionals suggest that demonstrating accessibility is “the right thing to do” as increasingly more institutions and fund managers are looking favourably on Socially Responsible Investing (SRI).
The aim of company websites as far as investor relations is concerned, is to provide quick and easy access to the key information and tools that investors and analysts most want.
By enabling iXBRL to electronically process, store, and transmit financial data within digital reports, the technology offers many beneficial uses, which are welcomed in this digital age. Predictably, the way forward will continue in the direction of digital and standardised reporting.
If a digital report is created in HTML format, it is possible to make use of this report with iXBRL technology. Financial data within the digital report is provided with clearly identifiable labels. This process is referred to as “tagging” the data. The tagging of financial information within digital reports is mainly computer-based.
The use of iXBRL in digital reports has the advantage, among other things, of a very high degree of standardisation of data. This increases the comparability of information, and inter-operability and degree of automation. In addition, the use of iXBRL can dramatically improve the data quality of the reports, since media leaks can be largely avoided by using iXBRL. Another possibility created by using XBRL is Real-Time Reporting.
Other benefits for the reporting company of using XBRL in digital reporting include the high level of flexibility provided by the individual extensibility of iXBRL taxonomies, the international recognition of the standard and the fact that the use of iXBRL is in no way limited to business reports. In addition, report readers enjoy a clear understanding of standardised data, greater data transparency, and an easier way to detect irregularities.
Technology is a significant enabler, Liikanen has said, stating however that the real benefits will only come once long held efficiency habits are replaced. In addition, the right tools must be made available, and laws should be updated to allow digitisation to be fully embraced by regulators.
Digital reports can make them interactive for the user. Moreover, the ability to find digital reports over the Internet gives the reporting company access to a wide range of people. By using interactive digital reports, the company can retrieve, evaluate, and exploit extensive user data by retrieving, clicking, and scrolling.
It is widely known that investors seek diversification in risk and investment opportunities. Consequently, the digitisation of financial information can help them to achieve these goals. It is important that work is continuously carried out to facilitate and support transparent, accountable and efficient financial markets in a digital world.
Regulators globally are already fully embracing electronic filing with iXBRL, the IFRS taxonomy being used in Chile, Peru, Mexico, South Korea, South Africa, Australia and the US. The European Commission has finalised its proposals to require listed companies that prepare consolidated financial statements using IFRS standards to tag their primary financial statements using the IFRS taxonomy for financial years starting on or after 1 January 2020.