Almost 70 per cent of respondents to a survey are worried Hong Kong companies' accounting statements are not true. The telephone survey of 445 people between December 23 and January 1 was carried out by the Democratic Party in the wake of a slew of recent high-profile accounting scandals. 'The results show there is a serious crisis of confidence in the quality of the local stock market,' said Sin Chung-kai, the party's economic affairs spokesman. 'The government has to carry out radical market reform plans to restore investors' confidence or Hong Kong will soon lose its reputation as a leading international financial centre.' The survey showed 69.2 per cent said they were either 'very worried' or 'worried' about the accuracy of listed firms' accounting statements. Only 2 per cent said they were not worried. An overwhelming 89.1 per cent said there was an 'absolute need' or 'a need' for the government to tighten regulation on companies and professionals including listing sponsors, accountants, surveyors, lawyers and analysts. Only 2.7 per cent said there was no need. The survey found 74.6 per cent were worried about the integrity of executives and 70.3 per cent were concerned about the reliability of analyst reports. Mr Sin said the confidence crisis had contributed to the 18 per cent fall in stock market turnover last year . Investors were discouraged by cases such as Shenyang-based orchid-grower Euro-Asia Agriculture (Holdings), which is alleged to have inflated its revenue by 20 times in four years to obtain a listing in Hong Kong last July. The Democrats will hand a range of proposals to the government on Monday, including a call for the government to accept a proposal to use taxpayers' money to set up an independent investigation committee to crack down on malpractice of accountants. It also wants the government to ban sponsors from being underwriters of the same listings and says accountants should have a legal obligation to report fraud. Mr Sin said the government should also introduce derivative actions to allow investors to seek compensation from those who commit malpractice. The party said government should shift the approval of new listings from Hong Kong Exchanges and Clearing to the Securities and Futures Commission. Graphic: fin03gbz
