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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

#471

Post by lII1lIlI11ll »

busterarm wrote: post #141
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.

Yeah, it always surprises me when people on HN of all places who should have some modicum of critical thinking assume that, say, Bobby Kotick, Stephen Elop or a string of recent Intel's CEOs are some kind of rogue actors who just scammed their shareholders when in reality they were doing what they were hired to do by the board which represents (big) shareholders.

Re: US SEC preparing to scrap quarterly reporting requirement

#472

Post by busterarm »

lII1lIlI11ll wrote: post #471
busterarm wrote: post #141

Earlier quoted context omitted.

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.

Yeah, it always surprises me when people on HN of all places who should have some modicum of critical thinking assume that, say, Bobby Kotick, Stephen Elop or a string of recent Intel's CEOs are some kind of rogue actors who just scammed their shareholders when in reality they were doing what they were hired to do by the board which represents (big) shareholders.

A pretty large percentage of the population believes in some pretty strange falsehoods about how business works, capital, economics, etc.

Re: US SEC preparing to scrap quarterly reporting requirement

#473

Post by svnt »

thfuran wrote: post #250
svnt wrote: post #238

Earlier quoted context omitted.

No, they stop hunt their way to depressed prices where they then buy anticipating the recovery while you closed out your “safe” retirement positions at -15%.

>while you closed out your “safe” retirement positions at -15% User error

It’s funny and also disadvantages everyone who can’t trade 24/7. Win/win?

Re: US SEC preparing to scrap quarterly reporting requirement

#474

Post by cosmicgadget »

rogerrogerr wrote: post #278
cosmicgadget wrote: post #180

Earlier quoted context omitted.

I mean those personalities are also hyperfocused on share price.

Yes, but focused on it being the highest it possibly can _tomorrow_ or the highest it possibly can be in ten years is a huge difference. Only some executives have the ability to take actions based on a long view without being replaced by the board. Usually founders and near-founders.

Right so if you are already hyperfocused on tomorrow then focus on the end of the quarter is pretty much a wash in terms of short- versus long-term decisionmaking.

Re: US SEC preparing to scrap quarterly reporting requirement

#475

Post by fc417fc802 »

vannevar wrote: post #468
fc417fc802 wrote: post #464

Earlier quoted context omitted.

Not really. Or rather I think we both agree and disagree. Dysfunction is always possible (that's why we have regulation) and if you want to make a case that what happened between OpenAI and Nvidia ought to be against the rules that could certainly make for an interesting discussion. However it's not at all uncommon for large sales agreements to come with additional strings attached. On its face I don't see how this e…

>If my company wanted to barter with another company to exchange equity for infrastructure how would you expect that to be reported? Did this situation differ from that expectation? As I mentioned, I would have no problem if that's what happened. But it isn't. Nvidia recorded the cash as ordinary income. They did NOT record the stock as income. Cash has a clear value; stock does not. You keep reducing the transaction…

I haven't reduced it rather I've asked you why you think it shouldn't be reduced.

So your objection is the way in which they did the accounting? This is not an area I'm particularly familiar with. Does the way they went about it fall outside of the norm for the US? Or is your objection a more general one regarding the US regulations on the matter?

I understand you object but I don't quite follow why. When it comes to manipulating the OpenAI valuation couldn't Nvidia have intentionally overpayed for the stock in cash? Wouldn't that have provided the exact same quantity of capital, the exact same investment, the exact same valuation?

Maybe it would be different if their GPUs weren't in such demand but they are. Even in such a case, they could have structured the transaction as a series of smaller independent ones. Same ultimate outcome.

Re: US SEC preparing to scrap quarterly reporting requirement

#476

Post by vannevar »

fc417fc802 wrote: post #475
vannevar wrote: post #468

Earlier quoted context omitted.

>If my company wanted to barter with another company to exchange equity for infrastructure how would you expect that to be reported? Did this situation differ from that expectation? As I mentioned, I would have no problem if that's what happened. But it isn't. Nvidia recorded the cash as ordinary income. They did NOT record the stock as income. Cash has a clear value; stock does not. You keep reducing the transaction…

I haven't reduced it rather I've asked you why you think it shouldn't be reduced. So your objection is the way in which they did the accounting? This is not an area I'm particularly familiar with. Does the way they went about it fall outside of the norm for the US? Or is your objection a more general one regarding the US regulations on the matter? I understand you object but I don't quite follow why. When it comes to…

>So your objection is the way in which they did the accounting?

Yes, the accounting is the problem. As I said from the outset, if they actually just traded chips for stock, it would not be an issue.

Re: US SEC preparing to scrap quarterly reporting requirement

#477

Post by fsckboy »

cluckindan wrote: post #302
fsckboy wrote: post #198

Earlier quoted context omitted.

that makes no sense. companies need capital, that's why there is a stock market. dividends are paid from past earnings, never capital (earnings are only a %age of the value of the capital) and not from higher expectations of the future.

In a perfect world… reality is different, however. Plenty of companies take on debt to pay dividends, e.g. just before going public.

growing companies generally have capital needs that exceed retained earnings, so paying dividends would by definition increase capital need.

Re: US SEC preparing to scrap quarterly reporting requirement

#478

Post by elil17 »

jedberg wrote: post #315
elil17 wrote: post #301

Earlier quoted context omitted.

Right? Why do we even need all-day trading? I have seen a once-daily auction proposed, which seems like a sensible approach to me.

That wouldn't be enough liquidity, and also wouldn't solve the problem if the auction happened at a specific time. Day traders would all put in their bid at the last possible moment. What solves the day trading problem is doing chunked actions at random small intervals (like between 2-7 seconds). Then you can't put your bid in at the last moment because you won't know when it is. So your best bet is to put in your bi…

I do see your point regarding timing, but I don't see why daily isn't enough liquidity when, for decades, funds from trades have taken multiple days to clear.

The very existence of holiday weekends shows that it's actually totally fine if you go 72 hours without any trades resolving.

Re: US SEC preparing to scrap quarterly reporting requirement

#479

Post by jedberg »

elil17 wrote: post #478
jedberg wrote: post #315

Earlier quoted context omitted.

That wouldn't be enough liquidity, and also wouldn't solve the problem if the auction happened at a specific time. Day traders would all put in their bid at the last possible moment. What solves the day trading problem is doing chunked actions at random small intervals (like between 2-7 seconds). Then you can't put your bid in at the last moment because you won't know when it is. So your best bet is to put in your bi…

I do see your point regarding timing, but I don't see why daily isn't enough liquidity when, for decades, funds from trades have taken multiple days to clear. The very existence of holiday weekends shows that it's actually totally fine if you go 72 hours without any trades resolving.

There are whole books on this, but the short summary is that there are infinite times when information can change that would affect the value of a company. Anything less than infinite trading is a compromise where the price is no longer reflective of the value. The bigger the gap in the time, the bigger the gap between price and value.

For example, if you could only trade once a day, let's say a company announces midday that some huge customer has just left their platform. Their price should drop, but without trading it can't. So now everyone knows that their value is lower, but can't do anything about it. So people who own that stock will hold their money and not make other trades, because they know they are going to lose a bunch when trading happens again.

> The very existence of holiday weekends shows that it's actually totally fine if you go 72 hours without any trades resolving.

Trading never stops. There is an entire secondary market that has after hours/weekend trading, and a tertiary private market when that one isn't open. It's just you (and all the other retail traders) who can't trade.

Which if anything proves the opposite of your point. Liquidity is so important that wealthy people set up an entire system to keep trading just so they can still have it.

Re: US SEC preparing to scrap quarterly reporting requirement

#480

Post by JumpCrisscross »

balderdash wrote: post #469
JumpCrisscross wrote: post #461

Earlier quoted context omitted.

> that would 0.15% of their net income and meaningless number in relation to the liquidity provided It's still a distraction for leadership. While they're on a strategic pivot like the current one, quarterly reporting makes sense. If they're floating along on predictable cash flows like usual, semiannual reporting with an 8-K if something weird happens should still be fine.

Personally I'd look at this exercise as a core part of their job I don't see how reporting on the financial results of the company to its owners on a quarterly basis is a distraction. Is this a huge endeavor for the finance/legal/IR teams, yes. Does this impact the operations of the business, not a whole lot.

> don't see how reporting on the financial results of the company to its owners on a quarterly basis is a distraction

I invest in mostly private companies. I’m be pretty furious if I learned those executives spend a material part of every quarter making pretty presentations for me.

> Does this impact the operations of the business, not a whole lot

Every public-company CEO and CFO I know basically has to drop what they’re doing for a week, sometimes two, a quarter when it comes to earnings. Preparing reports and releases. Talking to big investors and bank analysts.

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