The importance of accounting communication during the AGMs of Maltese listed banks

Abstract

Purpose: The main aim of the study was to analyse the interaction between top executives, the external auditor and shareholders during the AGMs of Maltese listed banks from the private individual shareholders’ point of view. Design: The objectives were achieved through a questionnaire distributed to private individual shareholders of local listed banks. The questionnaire was administered to a sample of shareholders via post, internet and telephone, due to a low response rate from postal questionnaires. Findings: The study unveiled that results were quite similar for the three listed commercial banks and thus were generalised on the AGMs of the local banking sector. It emerged that the majority of retail shareholders of local listed banks never attended AGMs, whereas approximately one third of shareholders attend AGMs mainly to acquire information about the bank, and to ask/listen to questions put forward by other knowledgeable shareholders. Findings revealed that the addresses delivered by the Chairman, CEO and external auditor are too stage-mannered and discourage shareholder participation. In fact, the majority of questions during AGMs are put forward by MASS representatives or shareholders that are members of the MASS. Furthermore, most of the questions asked during AGMs relate to financial accounting, particularly dividends. Conclusion: The study concludes that private individual shareholders of local listed banks are adequately satisfied with the flow of accounting communication during AGMs. However, there is room for improvement to encourage more shareholder participation and activism during AGMs. Possible improvements include: restructuring the AGM, greater involvement by the MASS, webcasting the AGM, amendments to the annual report and financial education. Value: Since this study is the first to evaluate accounting communication during AGMs of Maltese listed banks, it adds up to local literature about the topic. Moreover, it is expected that this study will aid MLEs to improve communication with shareholders, particularly during AGMs.