Over on the Small Cap Institute website, Adam Epstein encouraged companies not to “engage in linguistic games to try and camouflage bad financial news.” He lists several ways companies try to do this. Do you recognize any from your past earnings releases?

– Serial, italicized, headline subtitles that refocus attention away from key financial results

– Overemphasis upon non-GAAP results, and even discussing them to the exclusion of GAAP results

– Introducing completely new reporting metrics – just for the quarter – to highlight data that might distract investors from the poor results

– Long-winded CEO quote setting forth how “unbelievably excited” they are about some of the “extremely transformative” things the company is working on that make them “incredibly optimistic”

– Changing the comparative reporting periods to opportunistically highlight sequential results, since the year-over-year comparisons are bad

– Lengthy, bullet-pointed lists of “business highlights” that are predominantly comprised of immaterial information

– Introduction of new initiatives that investors don’t hear much about thereafter

Adam says investors don’t buy these tactics. And, if anything, they actually hurt investor perception of the company. Not surprisingly, some of these are really similar to some “pet peeves” listed in our “Checklist: Earnings Releases – 54 Pet Peeves.”

I loved that checklist so much it inspired me to do a deep dive on press releases, which we’ve turned into “Checklist: Legal Review of Earnings & Other Press Releases” that attempts to summarize the factors that in-house or outside counsel should consider when preparing or reviewing a press release. This is a resource I really wish I had as an associate, since I feel like I learned these lessons piecemeal, sometimes on my own and sometimes through more formal training. Check it out when you have a moment, and please feel free to share any feedback. I hope it helps guide some junior attorneys or that senior attorneys find it helpful for training.

– Meredith Ervine