Analysts Are `Distorting' Markets over Accounting Standards

Article excerpt

STOCKMARKETS ARE being distorted by financial analysts trying to second guess the impact of new international accounting standards, according to Jon Symonds, chief financial officer of AstraZeneca and chairman of the Hundred Group of FTSE 100 finance directors.

Mr Symonds has hit out at investment analysts' attempts to predict the winners and losers of the accounting changes being imposed across the European Union.

Investors fear a big rise in the volatility of corporate profits as a result of the harmonisation of international standards, which include new rules on accounting for mergers and acquisitions, employee share options, pension fund deficits and the use of complex derivatives.

Even the UK's biggest companies are still several months away from communicating the financial impact of changes, Mr Symonds said: "There are already a number of analysts' reports out there trying to assess the impact on various industry groups, but there is simply not enough information available yet in the published accounts."

The changes involve dozens of new rules. They will mean hundreds of UK companies, and thousands more across the EU, restating previous accounts and attempting to set out for investors how future results will differ. The Hundred Group is advising its members on how best to communicate with the City, but Mr Symonds admits that "there is going to be such a deluge of information, the propensity for confusion is high".

Earlier this month, the Institute of Chartered Accountants issued dire warnings of a "shockwave" hitting financial markets if the changes are not adequately explained.

The EU is backing adoption of global accounting standards as a means of encouraging a cross-border financial market, while the UK is keen to ensure convergence with the US. …