Is the Sky Falling? SEC Prepares Proposal to Eliminate Quarterly Reporting Requirement
Let's go to the archives
The WSJ reports that:
The Securities and Exchange Commission is preparing a proposal to eliminate the requirement to report earnings quarterly and instead give companies the option to share results twice a year, according to people familiar with the matter. …
The push for semiannual reporting gained steam late last year. The Long-Term Stock Exchange petitioned the SEC to eliminate the quarterly earnings report requirement, The Wall Street Journal reported in September. Within days, President Trump and SEC Chairman Paul Atkins both said they supported the idea.
Publicly traded companies in the U.S. have reported results every three months for the past 50-plus years.
Over on LinkedIn, Joel Fleming is displeased:
News today that the Trump administration is casually kicking out another leg of the stool that has made US capital markets great. …
For decades, when you bought equity in a U.S. public company, you knew what you were buying and you knew that insiders wouldn’t be able to steal it from you. Those protections weren’t holding the market back, they were supercharging it.
A comment from Jim Davidson points out that:
There are comparable securities regulation regimes across the pond that we can examine; generally I think the consensus among the corporate grunts like me is that private ordering (ie, covenants) will compel most public companies to continue to deliver quarterly results in some form in order to appease investors, regardless of what the administration does here.
I’m siding with Davidson on this one.
I offered my take on the debate over quarterly reporting in three posts last September.
My first post discussed whether quarterly earnings reporting contributes to managerial short term biases:
Should We Eliminate Quarterly Earnings Reports (Or, At Least, Make Them Optional)? Part 1
The WSJ today reported that:
My second post situated the current debate over quarterly earnings reports in the longstanding debate over mandatory disclosure generally:
Should We Eliminate Quarterly Earnings Reports (Or, At Least, Make Them Optional)? Part 2
In the prior post, I discussed President Trump’s renewed call for the SEC to eliminate mandatory quarterly earnings reports. In that post, I discussed whether quarterly earnings reporting increases the pressure for managers to focus on short-term performance.
My last post argued that the sky is not falling, because market forces will work:
Should We Eliminate Quarterly Earnings Reports (Or, At Least, Make Them Optional)? Part 3
Prompted by President Trump’s renewed call for the SEC to eliminate mandatory quarterly earnings reports, I’ve been blogging about the case for doing so.
The sky wouldn't fall. Profits at plaintiffs' firms might, but the sky would be just fine.