2023-04-17 18:59:00
Just a few hours before the start of the new season of business results, the National Securities Market Commission (CNMV) yesterday issued a serious warning to Spanish listed companies regarding the need to be completely transparent and clear in the financial information that they transfer to the market. .
The supervisor warns in a statement that the abusive use of terms such as ebitda, free cash flow or recurring operating profit –metrics not regulated in accounting regulations– can lead to some confusion for investors when analyzing the accounts. Faced with this situation, the organization led by Rodrigo Buenaventura was emphatic yesterday, assuring that it has the power to fine companies that abuse these terms in their presentations.
If these alternative financial magnitudes are finally included, the market regulator insists that the listed ones must provide “sufficient information” so that investors can interpret them, facilitating “their comparability and reliability.” Specifically, they advocate that these financial documents include, for example, direct hyperlinks to the explanations that are necessary “without mediating a succession of links” until reaching the final information.
The guidelines of ESMA (the regulator of the European markets) have also been pointing in this direction for years. Specifically, they consider that the listed companies make an abusive use of these unregulated metrics when they “present greater emphasis or prominence” in the documentation submitted to the market, above “the measures obtained directly from the financial statements.”
In other words, companies should not give more importance in their communications to a positive ebitda, for example, than to the data of the net result. Especially in cases in which, for example, there are losses, but that accounting creativity allows presenting a positive ebitda.
With the round of results just around the corner, the supervisor makes it clear with his statement that in these weeks he will closely monitor this practice, especially when these terms appear “with a preferential and prominent informational location or when the evolution of the company It is mostly explained by these measures”.
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