
President Trump asks SEC to study abolishing quarterly earnings reports - skolos
https://money.cnn.com/2018/08/17/news/companies/trump-drop-quarterly-reports/index.html
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gumby
So what are the problems? One, as stated, is that quarterly reports turn into
quarterly voting by the Stockmarket, and thus poor decision making. Another,
frankly, is the work on putting them together. It doesn't seem like cutting
the frequency in half will matter much: long term planning has a longer
horizon than six months.

Why not go the other way? Allow companies to publish financial statements
monthly (with a rolling close) plus annually one month after the annual close.
And as for the various material statements and representations that go along
with them, let various press releases, tweets etc account for them, plus the
annual formal statement (shareholder letter).

IIRC Cicso famously had a "three day close" closing their books three days
into the new month. Some reasonable software investment should permit many
companies to do a rolling close. Those who make that investment would be
permitted to stop doing quarterlies.

This is a case where a more frequent cadence of lower amplitude might allow a
better long term view!

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DataWorker
Wouldn’t that tend to encourage faster more volatile trading?

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gumby
Probably not. That's what I was getting at with this sentence:

> This is a case where a more frequent cadence of lower amplitude might allow
> a better long term view!

Essentially, the quarterly cadence makes each release a big deal. More
frequent releases may have slightly more volatility encouraging investors to
look for longer trends.

Ideally you'd have weekly closes but except for large companies that would
offer all sorts of swings due to trivia like expense reports or other
transients. But GAAP in theory would allow a large modern corporation to close
every day. The whole point of accrual is to damp out this nonsense.

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tonysdg
After reading the WSJ version of this article, I can see the argument in-
favor: quarterly earnings reports put more weight on hitting short-term goals
over long-term investment. That's just basic human nature, I suppose.

Yet flat out abolishing them seems a terrible price to pay in terms of
transparency. Perhaps a middle ground, based on the size of the company in
terms of revenue? Or some other (less onerous, I guess) means of reporting --
in quantifiable terms -- the health of a business each quarter?

