A comparison of Q1 and Q2 earnings news releases shows a 20% increase in the number of S&P/TSX composite companies disclosing more information, quarter over quarter in 2002.

According to research from the Canada NewsWire (CNW) Earnings Division, an income statement, balance sheet, cash flow statement and complete notes, are now included in the earnings releases of more than half of all companies listed in the S&P/TSX Composite Index. In Q1 only one-third of the companies studied provided all three financial statements and accompanying notes.

“The key ingredients to a good earnings release are the income statement, the balance sheet, the cash flow statement and a complete set of notes for those financial statements,” said Peter Arender, president, Toronto Society of Financial Analysts. “There is no way that investors can protect themselves against fraud or scandal but those companies who include three financial statements and notes, a summary or Management Discussion and Analysis (MD&A) really help investors to make more informed opinions about investing.”

Quarterly earnings releases are also getting longer. In Q2 2002 the average length of a quarterly news release rose by more than 55 per cent compared with last year. Average word volume per release grew from 2,678 to 4,161 as companies demonstrated an increasing trend towards detailed disclosure that puts financial data into context. Companies included information like MD&A, summaries, tables and charts to help illustrate financial data.

“We now see that Canadian public companies are beginning to recognize the importance of fair representation, and the full disclosure of financial results to the restoration of market integrity,” said Eva Spanoyannis, editor of the Canada NewsWire Earnings Division. “Investors will reap the benefit of having more detailed information made available to them.”

However, not all public companies are embracing the disclosure trend. Thirteen percent of S&P/TSX listed companies did not provide any financial statements and at best included financial charts, not statements, to support a written financial summary.

The Q2 2002 CNW Quarterly Earnings Report analyzed earnings news releases for all 288 actively traded constituents of the S&P/TSX Composite Index as of Sept. 19, 2002. The 288 companies were part of the index in Q2 when the research was conducted. The analysis does not reflect index changes that took effect Sept. 20, 2002.