September 24, 2018

No More 10-Qs? The Consequences?

Last month, John blogged about a President Trump announcement asking the SEC to study the possibility of companies moving from quarterly to semi-annual reporting. John blogged that this wasn’t a new idea – and he indicated that making this change likely wouldn’t promote a longer-term focus, nor perhaps even result in companies foregoing reporting quarterly results. I’m jumping in now with these additional thoughts:

1. With semi-annual reporting, there would be a higher risk of insider trading since blackout periods would be far longer.

2. Semi-annual reporting would create more 10b5-1 plan business because blackout periods would be longer.

3. Bigger investors would get an advantage over smaller ones because they would likely get access to more nonpublic information.

4. As noted in this blog, Cooley’s Cydney Posner summarizes this article that indicates that cost-savings from the elimination of two quarterly reports would be partly offset by higher fees for the semi-annual reports. It appears that any cost-savings would benefit smaller companies the most.

5. Funny how things can change with time. Long ago, it was Republicans pushing for more frequent reporting. For example, this SEC report was conducted under a Republican regime. See #10 in the summary in particular.

Foregoing Quarterly Reports: Some Opinions

Here’s a bunch of articles discussing the idea of foregoing quarterly reports:

Bloomberg’s “Trump Joins Dimon, Buffett Bandwagon and Hits a Deere”
Quartz’ “Trump’s crazy new finance idea isn’t that crazy”
Vox’s “Donald Trump’s sudden interest in quarterly earnings reports, explained”
Bloomberg’s “Reporting Profits Daily Would End Corporate Short-Termism”
WSJ opinion “Six Months Isn’t ‘Long Term'”
Crain Chicago’s “Abandon quarterly reports? Bad idea.”
Bloomberg’s “Nobody Enjoys Earnings Season”
Cornell Prof’s “Cutting Disclosure Frequency Is the Wrong Solution to the Wrong Problem”

Proxy Process Roundtable: Set for November 15th

On Friday, the SEC announced that its proxy process roundtable is set for Thursday, November 15th. We still don’t know the participants – nor specific agenda topics…

Broc Romanek