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US SEC preparing to scrap quarterly reporting requirement

reuters.com

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Re: US SEC preparing to scrap quarterly reporting requirement

#91

Post by DesaiAshu »

nickff wrote: post #60
throw0101c wrote: post #53

Earlier quoted context omitted.

> And it’s not just execs, but the whole corporate machinery that takes 3–6 weeks after quarter end to churn out reports. Release early, release often. If you want corporate machinery to run more smoothly with less effort, force it to operate more frequently not less: when TLS certs had 2-3 year lifespans there was all sorts of manual methods that people forgot how to do; then it was maximum one year. We then got fre…

The problem with reporting often is that the reports must each be audited (which is time-intensive and expensive), and any errors subject the companies to class-action lawsuits (which only ever benefit the lawyers, but that is a separate matter). I would also prefer more frequent reports, but only if they were less burdensome and risky.

You could report every month and audit every 6 months

Re: US SEC preparing to scrap quarterly reporting requirement

#93

Post by donavanm »

sashank_1509 wrote: post #22
paxys wrote: post #4

Earlier quoted context omitted.

Just look at the track record of SPACs for a preview of how that will turn out.

I think it’s still fine. I’ve invested a lot into some SPAC’s. I’m good on 1, break even on the other. And I’ll keep holding it, since these companies are still pre-revenue and I hope they 100X. The overall idea of SPAC’s is not bad, even if Chamath only created them to exit his sh*t investments. There are very few other ways for retail investors to invest in potential 100-1000X companies (which are generally pre-rev…

Dude. SPACs are structurally a _terrible_ idea for any non-privileged investor. The sponsors 20-25% comp, the early warrants, etc. All of those costs are taken out of the bag-holder, sorry “investors”, expected value. The entire thing is setup to maximise info asymmetry and perverse incentives for the sponsors at the cost of bag holders. The “shitty tactics” _are why SPACs exist_.

Re: US SEC preparing to scrap quarterly reporting requirement

#94

Post by throw0101c »

3eb7988a1663 wrote: post #82
throw0101c wrote: post #75

Earlier quoted context omitted.

Perhaps the auditing needs to be done on the workflow process and once the automated code is in place there needs to be a traceable chain of modifications to it that need to be justified. The "audit" certifies a certain hash of a repo that produces known-good results, and if you use a different commit in that repo you have explain in an SEC filing why you modified things. Basically reproducible builds for financial r…

I know a few accountants, and I do not think this is possible. There is an incredible amount of manual adjustments that have to occur to get the books in order. I suspect the official process is 100% GAAP approved and great, but the messy reality has thousands of tweaks that were massaged all over the place to correct for one thing or another.

Yes, I know some accountants as well, as well as bookkeepers who have to do adjustments for things like 'timecards' and punching-in and -out: there's all sorts of adjusting that needs to be made.

But any "mistakes" that are made are simply corrected the next reporting period (whether that's monthly, fortnightly, weekly, or daily) in this more-frequent proposal.

The 'crunches' that occur at quarter/period-end are there because there is so much attention put on those reports because they're so infrequent. If the sampling rate is higher then errors are corrected that much sooner.

The reports are generated on the books in the state that they currently are in on a monthly/fortnightly/weekly/daily basis, and any adjustments will be "fixed" in the next reporting period. The reason why there's so much pressure to get them "correct" now is because of the (relatively) infrequent reporting. If you know that things will be 'sorted out' in a fortnight (two weeks), or whatever, there's less pressure now to get them "right".

There will be an expectation of less perfecttion and more corrections and better 'smoothing' due to the higher 'sampling rate'.

Re: US SEC preparing to scrap quarterly reporting requirement

#95

Post by DANmode »

throw0101c wrote: post #53
kshacker wrote: post #18

This is an awesome move. They’re not saying the reports go away—just moving them to every six months. After hating how each company runs on an internal quarterly cycle, I have to welcome it despite how the change originated. Six months is still short from the perspective of perverse incentives, but if you free up one week of charade from execs every 13 weeks, maybe they can focus better. And it’s not just execs, but…

> And it’s not just execs, but the whole corporate machinery that takes 3–6 weeks after quarter end to churn out reports. Release early, release often. If you want corporate machinery to run more smoothly with less effort, force it to operate more frequently not less: when TLS certs had 2-3 year lifespans there was all sorts of manual methods that people forgot how to do; then it was maximum one year. We then got fre…

…huh?

What does any of this have to do with too-soon reports poorly representing positive trends that can’t be tracked in 1-3 month timelines?

Re: US SEC preparing to scrap quarterly reporting requirement

#97

Post by DesaiAshu »

ralph84 wrote: post #29

If you want to discourage short-term thinking, make the vesting period longer on executive stock grants. Making companies' performance less transparent just opens up more opportunities for insider trading.

Could also price in negative externalities of short term trading with higher taxes for that behavior, nudging the markets to focus on value driving investments rather than speculation

Re: US SEC preparing to scrap quarterly reporting requirement

#98

Post by otterley »

nickff wrote: post #60
throw0101c wrote: post #53

Earlier quoted context omitted.

> And it’s not just execs, but the whole corporate machinery that takes 3–6 weeks after quarter end to churn out reports. Release early, release often. If you want corporate machinery to run more smoothly with less effort, force it to operate more frequently not less: when TLS certs had 2-3 year lifespans there was all sorts of manual methods that people forgot how to do; then it was maximum one year. We then got fre…

The problem with reporting often is that the reports must each be audited (which is time-intensive and expensive), and any errors subject the companies to class-action lawsuits (which only ever benefit the lawyers, but that is a separate matter). I would also prefer more frequent reports, but only if they were less burdensome and risky.

The reason for strong auditing and personal attestation is because left to their own devices, some companies will produce bullshit and hoodwink investors. Blame Enron.

https://www.britannica.com/topic/Sarbanes-Oxley-Act

Like the building and electrical code, these regulations were written in blood.

Re: US SEC preparing to scrap quarterly reporting requirement

#99

Post by golfer »

alexpotato wrote: post #69

One of my favorite stories about logistics and quarterly earnings deadlines (from when I worked at a pharmaceutical company: "In our business, a truckload of various drugs can easily reach $10-$15 million. Now, if that truck arrives at the depot at 11:59pm March 31st then it's first quarter earnings. If it arrives at 12:01am April 1st then it's second quarter earnings. $15 million is a BIG shortfall, even for us, so…

Early in my career I worked at a place where the sales people would half-joke about signing deals on December 40th -- to claim it in the previous quarter/year.

Re: US SEC preparing to scrap quarterly reporting requirement

#100

Post by donavanm »

jordanb wrote: post #64
jrochkind1 wrote: post #31

Earlier quoted context omitted.

Can you connect the dots for me, why would reduced reporting requirements allow more startups to go public earlier?

Combining this with a SPAC a startup would be able to have a six month runway as a public company before having to disclose finances. I imagine that would be attractive to some firms.

Weird, why wouldnt this fantastic startup want to report on their performance in a standardized and accountable manner for six months after collecting public money to pay out insiders and “sponsors”?

Surely they wouldnt mind bragging about their fantastic GAAP P&L in their filing docs. Maybe its the pesky quiet period theyre trying to avoid, so they can be even more transparent about finances and equity holders.

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