The CNMV will fine companies that make up their results

Just a few hours before the start of the new season business resultsNational Commission for the Stock Market (CNMV) issued a serious warning to Spanish listed companies on Monday regarding the need to be completely transparent and clear in the financial information they transmit to the market.

In the press release, the supervisor warns that misuse of expressions such as “ebitda”“free cash flow” or “recurring business result” – metrics that are not regulated by accounting regulations – can lead to certain confusion for investors when analyzing the account. Faced with this situation, the body commanded Rodrigo Buenaventura was openly displayed this Monday assuring that it has the power to fine companies that abuse these conditions in their presentations.

Ensure transparency

If these alternative financial metrics are finally included, the market regulator insists that those listed must provide “sufficient information” for investors to interpret, facilitating “their comparability and reliability.” In particular, they advocate that these financial documents include, for example, direct hyperlinks to explanations that are needed “without mediating a succession of links” until the final required information is reached.

Guidelines for ESMA (regulator of European markets) have also been moving in this direction for years. Specifically, they believe that listed companies are abusing these unregulated metrics when they “place greater emphasis or prominence” over “metrics derived directly from financial statements” in market filings. that is, companies should not give more importance in their communications to positive ebitda, for example, than to net result data. Especially in cases where there are losses.

With a series of results just around the corner, the superintendent is making it clear in his statement that he will be closely monitoring this practice in the coming weeks. It will do so, first of all, when these expressions appear “with a preferential and prominent informative place or when the development of society is mainly explained by these measures”.