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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

#141

Post by busterarm »

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.

The problem isn't the executives, it's the boards.

But board members are largely just a proxy for the large shareholders anyway. E.g., short-term investment strategies are not going away.

Working C-levels would almost always much rather take the longer view against the wishes of their boards.

Re: US SEC preparing to scrap quarterly reporting requirement

#142

Post by mixdup »

jandrewrogers wrote: post #138
fnordpiglet wrote: post #126

Earlier quoted context omitted.

I up you to continuous reporting. Audit should be inherent to the system, not a process after the fact. As a public company all owners should have access to daily closed books, and all companies should be able to close their books daily in 2026. Every six months being the cadence we learn how our companies we own are doing is absurd. It leads to really long dark periods. Also for employees it means we can only divest…

That is an absurd cadence. It is extremely expensive to do this reporting; an an enormous amount of useless activity is slaved to providing it in companies that need to. This is literally a call for more bureaucracy theater. The obvious net effect is that companies would structure themselves to no longer have the reporting requirement, as the cost of reporting exceeds the benefits. That would not benefit society at l…

The reason quarters take so long to close is because the numbers are being fiddled with. There's no reason someone shouldn't be able to close a quarter and report the numbers with the automation we have today in technology, meaning without some magic AI/LLM, other than people are constantly trying to reclassify expenses or income in a way that saves the quarter

Why, after 30-40 years of modern computing in accounting does it still take a month to close the books? I worked at a public company that was $100m revenue yearly and it took a whole month to close the books. Absolute insanity. Even AT&T or Verizon or GM should be able to report at least weekly.

Re: US SEC preparing to scrap quarterly reporting requirement

#143

Post by jandrewrogers »

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…

Reporting is onerous as fuck. You end up with entire bureaucracies dedicated to the theater of reporting. The tighter the turnaround the dicier it becomes because certainty that anything you are reporting is true decreases, which increases liability.

This is one of those ideas that sounds amazing to people have never operated a real business with reporting requirements. In practice it turns into a classic case of Goodhart's Law. It drives insane incentives. Reducing reporting intervals would seriously reduce overheads and inefficiency in business.

This is 100% a good change.

Re: US SEC preparing to scrap quarterly reporting requirement

#144

Post by heliumtera »

Gigachad wrote: post #11
deadbabe wrote: post #7

If you have earnings too frequently, it encourages companies to become hyper focused on earnings and make less long term investments. But if there is too much gap in between earnings, there is potential for grifting. What to do?

Encourage more smaller privately owned companies rather than massive megacorps.

So either big companies would lobby against their interest, or SEC would do something independently. Honestly I cannot decide which one is more absurd.

Re: US SEC preparing to scrap quarterly reporting requirement

#145

Post by m463 »

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…

I can't help but think of friends of mine that always complained about their quarterly OKR reports.

Re: US SEC preparing to scrap quarterly reporting requirement

#146

Post by runako »

Karrot_Kream wrote: post #110
runako wrote: post #85

Earlier quoted context omitted.

> 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 li…

> badly performing companies can limp along tying up liquidity and locking up employee equity

"Just raised a Series E/F/G/H/I" companies

Re: US SEC preparing to scrap quarterly reporting requirement

#147

Post by JumpCrisscross »

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.

> If you want to discourage short-term thinking, make the vesting period longer on executive stock

It’s 3 to 4 years on average. This isn’t relevant to quarterly filing requirements.

Re: US SEC preparing to scrap quarterly reporting requirement

#149

Post by etempleton »

sheepscreek wrote: post #124
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…

This sounds great on paper till you realize the amount of time and effort that goes into coordinating so many humans is significant. Also quarterly reporting and TLS certs are worlds apart. There are things like SOX compliance in public companies. It is a mandatory requirement that necessitates so much ceremony surrounding how information is captured and decisions signed off. Then for the execs themselves, it is at l…

I think it shifts the skillset of executives a little bit. At publicly traded companies the quarterly shareholder meetings and the preparation that goes into it becomes such an outsized portion of the job that being good at that one thing is highly valued. I don’t think moving quarterly to bi-annually changes that much besides making the CEO and CFOs and some other folks jobs a bit easier.

Re: US SEC preparing to scrap quarterly reporting requirement

#150

Post by themafia »

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…

> After hating how each company runs on an internal quarterly cycle

In 25 years of working professionally I've never felt this or heard this even once.

> execs every 13 weeks, maybe they can focus better.

I don't care about the struggles of executives. I'm entirely unconvinced that an additional two weeks a year will afford them enough "focus" to make any appreciable difference.

> that takes 3–6 weeks after quarter end to churn out reports.

We run a sales heavy organization. No one "churns" out reports and hasn't for decades. The biggest struggle is getting engineering to finalize their existing capital project reports. Everything else is automated to such an extent that I can't even fathom this scenario still existing.

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