It would be interesting to see if reducing reporting requirements allows more startups to go public earlier in their journey, hence opening up more opportunities for public to participate in the upside!
But mostly downside
US SEC preparing to scrap quarterly reporting requirement
101–110 of 491 posts
Re: US SEC preparing to scrap quarterly reporting requirement
#102The SEC is not the only one who gets a say. Their are rules that SEC does not require that have been required for certain exchanges or indices. For example, no dual class shareholders or certain board compositione have been required for listing.
Let's have an exchange or heck , even an ETF require quarterly reporting. I would invest in that and I am sure many wouldn't. It will trade at a premium or it won't.
Re: US SEC preparing to scrap quarterly reporting requirement
#103Earlier 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.
Isn't that the kind of toil that tends to get automated away with CI/CD?
Re: US SEC preparing to scrap quarterly reporting requirement
#104This idea goes back several years, and Barry Ritholtz had thoughts on it back in 2015: > Back to quarterly earnings. Why do we even require them in the first place? The answer is that thanks to the transparency provided by regularly reported earnings and profits, investors can make informed decisions about which stocks to own or avoid. Owners of public companies have hired managers to run the businesses for them, and…
Imo, this makes much more sense...
But this is Trump's SEC.. so expect backwards progress like with everything else.
Re: US SEC preparing to scrap quarterly reporting requirement
#105[flagged]
And allow more insider trading.
Re: US SEC preparing to scrap quarterly reporting requirement
#106What company doesn’t produce monthly financial statements, let alone quarterly. I could understand this for small caps.
I also don’t see how less granularity in financials is a good thing, yes if you have bad quarter that bad (but at least you can make it up the next quarter vs a bad six months likely introduces more volatility (I think?). Also I think one of the biggest complaint is “short termism” in markets, but I hardly think that will make much of a difference.
Re: US SEC preparing to scrap quarterly reporting requirement
#107One 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…
Likewise, if you know you've already got the current quarter in the bag, but the next quarter is looking soft, you tell that truck driver to slow down!
Re: US SEC preparing to scrap quarterly reporting requirement
#108Earlier 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.
In the us, quarterly financials are not audited, only annual financials
Re: US SEC preparing to scrap quarterly reporting requirement
#109Earlier quoted context omitted.
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.
> 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.
Except Enron's results were audited. By (now defunct) Arthur Anderson:
* https://en.wikipedia.org/wiki/Enron_scandal
* https://en.wikipedia.org/wiki/Arthur_Andersen#Collapse
The auditing already existed and didn't stop Enron (or WorldCom; see also the silliness of GE under Jack Welch).
Sure SOx added more rules, but it's not like folks were flying without a net before.
Re: US SEC preparing to scrap quarterly reporting requirement
#110Earlier quoted context omitted.
I agree that would be preferable if reporting were less expensive and (legally) risky, and what you're describing is definitely closer to the original intent of the rule (that of giving investors the information available to management), but it would make being a public company even more burdensome than it already is, and the number of public corporations is already in decline.
> it would make being a public company even more burdensome than it already is Every company doesn't have to be public. The US taxpayer underwrites US securities markets, and companies that trade on our public markets have access to some of the deepest pools of low-cost liquidity in the world. But companies are obviously free to list elsewhere. > the number of public corporations is already in decline. Separate probl…
When companies stay private longer, private capital stays tied up for longer, decreasing public liquidity and keeping bad private investments afloat for longer. Part of the creative destruction of the dot com bust was the legion of badly performing companies that went public and were thoroughly rejected by public investors, offering an exit to later investors and employees. Right now badly performing companies can limp along tying up liquidity and locking up employee equity only to head to an eventual bankruptcy or bad IPO.