Tag: quarterly reporting

CII defends quarterly reporting

In December 2018, the SEC posted a “request for comment soliciting input on the nature, content, and timing of earnings releases and quarterly reports made by reporting companies.” According to the press release, the request for comment solicits “public input on how the Commission can reduce burdens on reporting companies associated with quarterly reporting while maintaining, and in some cases enhancing, disclosure effectiveness and investor protections.  In addition, the Commission is seeking comment on how the existing periodic reporting system, earnings releases, and earnings guidance, alone or in combination with other factors, may foster an overly short-term focus by managers and other market participants.”  (See this PubCo post.) At the end of March, the influential Council of Institutional Investors submitted its comments in response to the SEC request.

Would a shift to semiannual reporting really affect short-termism?

You remember, of course, that last month, the president, on his way out of town for the weekend, tossed out to reporters the idea of eliminating quarterly reporting.  (See this PubCo post.) The president said that, in his discussions with leaders of the business community regarding ways to improve the business environment, Indra Nooyi, the outgoing CEO of Pepsico, had suggested that one way to help business would be to trim the periodic reporting requirements from quarterly to semiannually. The argument is that the change would not only save time and money, but would also help to deter “short-termism,” as companies would not need to focus on meeting analysts’ expectations on a quarterly basis at the expense of longer term thinking. “We are not thinking far enough out,” he added. (For more on saving time and money through semiannual reporting, see this PubCo post.) But how much impact would a shift to semiannual reporting really have on short-termism?

Would semiannual reporting really have a major effect on costs?

You remember, of course, that last month, the president, on his way out of town for the weekend, tossed out to reporters the idea of eliminating quarterly reporting.  (See this PubCo post.) The argument is that the change would not only help to deter “short-termism,” it would also save all public companies substantial time and money.  But how meritorious is that idea? According to this article in the WSJ, if a change from quarterly reporting to semiannual reporting  were actually implemented, smaller companies could experience significant cost savings, but large companies—not so much. 

Is semiannual reporting on the horizon?

On the White House lawn before he boarded a helicopter for the Hamptons and his New Jersey golf club for the weekend, reporters had the opportunity to lob a few questions at the president.  While most of the questions were about security clearances and the criminal trials of his former staff, a different topic suddenly emerged in connection with an early morning tweet about quarterly reporting. The president said that, in his discussions with leaders of the business community regarding ways to improve the business environment, Indra Nooyi, the outgoing CEO of Pepsico, had suggested that one way to help business would be to trim the periodic reporting requirements from quarterly to semiannually. The argument is that the change would not only save time and money, but would also help to deter “short-termism,” as companies would not need to focus on meeting analysts’ expectations on a quarterly basis at the expense of longer term thinking. (For more on short-termism, see, e.g., this PubCo post.) He agreed that “we are not thinking far enough out,” and had asked the SEC to look into it.