A new global approach to company reporting has received the stamp of approval from a local accounting statutory body.
The Singapore Accountancy Commission yesterday voiced its support for the International Integrated Reporting Framework announced last week.
But it also cautioned that the higher level of disclosures required could increase competition for some firms.
The commission said firms adopting this framework - which entails regular reports from businesses that provide information beyond the usual financial results - would be able to communicate better with their stakeholders.
Integrated reporting will also "boost investors' confidence (in) firms in bad times and reduce stock volatility", it added.
This "will translate into higher valuation multiples for Singapore-listed firms and attract more firms to this region".
As more companies sign up for integrated reporting, "Singapore will be able to attract more overseas investors, particularly for institutional investors who care about the long-term value of a firm", the commission said.
So far, more than 100 organisations have agreed to undertake this new reporting method, including Singapore's DBS Bank as well as HSBC, Unilever and The Coca-Cola Company.
But the commission also noted that the greater amount of information that needs to be revealed could lead to more competition for companies.
Firms adopting such reporting would have to disclose company- specific data, for instance about their business model, strategies, sustainable practices and employees' well-being. The salaries of key managers and their relationships with various stakeholders would also have to be laid out.
But this is "a trade-off that firms have to accept", it added.
"If information is less transparent, investors or stakeholders face a higher risk and thus will demand a higher risk premium for capital invested in the firm."
The commission flagged other challenges as well, among them the need for regulators to balance the promotion of integrated reporting while maintaining rigour.
The commission is undertaking projects to promote integrated reporting here and in South-east Asia, including an educational document about the benefits of such reporting, practice guides for interested firms, and integration between a firm's annual report and integrated report.
The commission, established in April to develop Singapore's accountancy sector, plans to produce its first annual report based on the principles of the integrated reporting framework.