What are folks thinks about this notion? The idea that it would enable better long term corporate planning?
Would it really work out that way? Or would it simply provide most investors with far less transparency? Or would it be a total wash?
My current thinking is that I prefer more information, and if a company has a long term strategy I would want to know/consider that. But, if their situation is deteriorating, I want to know sooner rather than later. What else is there to consider?
Comments
There are only down-sides to this hare-brained scheme. Less accountability. Less information. Reduced trust in companies' activities, money-making capabilities. Top brass further insulated from real-world consequences.
You don't suppose he's advocating this junk for the Trump Organization's sake, do ya?
The mere mention of this junk is a further step toward reducing trust in US Business on the world stage. Who do you think is REALLY calling the shots, eh?
At the very least it reduces the # of times a company needs to be reckless just to meet or beat 'analyst's quarterly 'expectations' ... which could be a good thing for everyone except those whose pay/bonuses are tied to that action, of course.
I find it laughable that stock prices can tank or soar on the most minute of hits, beats, or misses on such 'estimates' too ... so that might also eliminate two pieces of 'scheduled BS volatility' during the year as well?
It would mean less "report cards" for the current administration, though. It feels like that is the driver here.
Though, I worked for a company that used accounting shenanigans to boost quarterly results. It ended very badly. Had they been given even more leeway, they would have enticed more investors and screwed more people. Less pressure/scrutiny on them, would not have made them more honest. It would not have helped Enron investors, either.
The good people may get more leeway. The thieves will too.
In addition to the pros and cons already mentioned in this thread, it suggests that the (current) costs of quarterly reporting may push some companies into remaining private, thus reducing transparency (for those companies).
While acknowledging the market's short-term-ism, it questions whether quarterly reports are a primary cause. It cites the following papers:
https://somacct.gmu.edu/workshops_files/20140501KVV.pdf
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3451938
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2817120&utm_source=chatgpt.com (someone at WaPo has been using AI)
Finally, it suggests that many companies may choose to report some info quarterly even if they're not required to. It cites this paper:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3881711
IMHO the cost implications might be addressed by relaxing reporting requirements on small companies while still requiring quarterly reports from large companies.
Cannot read all of that now, as I just had cataract surgery this morning. I do wonder if countries that relaxed quarterly earnings, saw a significant trend of improvement for investors.
I also wonder if private companies, planning to go public, might be the very ones that I would want the most transparency from. And who stand to gain the most from an influx of new investors. Admittedly, I have more questions than answers.