The newly appointed chairman of the Hong Kong Institute of Directors is advocating a compromise on the controversial quarterly reporting issue, suggesting companies that refuse to disclose quarterly results explain their stance in their annual reports. Kelvin Wong Tin-yau, who replaced Peter Wong Shiu-hoi as chairman last month, said he was keen to promote corporate governance that would enhance market transparency. He said the stock exchange could consider putting the quarterly reporting requirement into provisions of its 'best practices of corporate governance'. Under the suggested provisions of this code, companies would not be required to issue quarterly reports, but if they did not, they would have to explain in their annual reports why they failed to do so. 'Some analysts may think this does not go far enough, but it is better than changing nothing,' he said. Mr Wong said such an explanatory approach might more easily gain the support of listed companies, many of which are opposed to quarterly reporting, and would at least help push ahead the long-delayed reform. The stock exchange first considered the idea of quarterly reporting in 1998. When the Growth Enterprise Market launched in 1999, it required all companies listed there to report their financial results every quarter. The exchange had two rounds of consultation in 2002 and 2007 to propose that all main-board companies issue quarterly reports, but the efforts failed because of opposition by listed companies. Main-board companies only need to report results every six months. Another consultation will be made at the end of this year. Hong Kong and Australia remain the only two key markets that do not yet have any form of quarterly reporting. The United States, Singapore and the mainland require companies to give a full set of financial results every quarter. Since 2007, Britain has stipulated that listed companies give a narrative statement update about their business in the first and third quarters between the full financial statements in their interim and annual results. According to a Hong Kong Exchanges and Clearing study of 462 main-board companies and their 2007 annual reports, 63 reported results each quarter. Nine companies that did not report quarterly results explained why they did not do so. The rest, 73.4 per cent of all firms studied, did not report quarterly and provided no explanation. 'Requiring companies to explain is a way to encourage them to adopt more frequent reporting,' Mr Wong said. 'Some companies, such as those that have many associate companies, may really have difficulty issuing quarterly reports. They can explain their difficulties to investors.' This might enable stakeholders to assess whether there were sound reasons for the non-compliance, he said. Mr Wong is the deputy managing director of blue-chip port operator Cosco Pacific, which is among those firms that issue quarterly reports.