Taiwan must try to bring its accounting rules more in line with international standards so as to make domestic companies more attractive for global investors, a leading banker said yesterday.
Tu Yin-chung (
Companies here do not issue consolidated financial statements -- which includes accounting details of subsidiary companies -- on a regular basis, thus making it difficult for investors to analyze and compare them on a level field with international competitors.
"Accounting is a universal language, we must make it understandable to everyone," he said yesterday at a seminar, organized by accounting firm Deloitte Touche Tohmatsu's Taiwan branch.
Most developed countries, including the US, require all listed companies to issue consolidated financial statements on a monthly basis. Taiwanese regulations only require companies to publish them once, at the end of the year.
Such a practice may distort the international impression of the performance of local companies, he said. Hon Hai Precision Industries (
Financial statements must be simplified and shortened to make them easily understandable, Tu said, adding that minor accounting items may be omitted. In addition, most of the financial statements must be made bilingual to make them understandable to international investors, he said.
The government may also have to look at another controversial local accounting rule, which, unlike US accounting regulations, does not require local listed companies to treat employee stock bonuses as an expense. This regulation results in a presentation of far higher earnings ratios at local companies than at their US competitors.
International fund raising issues have come back into the limelight once again as more Taiwanese companies try to raise capital overseas.
Dozens of local companies have issued euro convertible bonds, global depository receipts, and American depository receipts, mechanisms by which companies become listed on equity exchanges overseas.
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