Leveraging its recent "Request for Comment on Earnings Releases & Quarterly Reports," which sought input on - among other things - whether the current periodic reporting scheme fosters an overly short-term focus by companies and other capital markets participants, the SEC announced today that it will hold a roundtable this summer to explore the causes of, and potential market-based and regulatory solutions to, short-termism, i.e., an undue focus and related expenditure of resources by companies on short-term over long-term results.
Potential topics for consideration include:
- The role, if any, that short-termism plays in the declining number of public companies. In particular, examining how the pressure on public companies to take a short-term focus in our markets may discourage private companies from going public could provide valuable insight into how to make our public markets more attractive and increase investment options for Main Street investors.
- Our ability to reduce burdens for companies while facilitating better disclosure for long-term Main Street investors. For example, I am interested in exploring whether the information typically included by companies in earnings releases could be allowed to satisfy certain quarterly reporting obligations and whether there are ways that quarterly disclosures could be streamlined. This is particularly the case in the first fiscal quarter when the quarterly report often comes closely on the heels of the annual report.
- The potential for certain categories of reporting companies, such as smaller reporting companies, to be given flexibility to determine the frequency of their periodic reporting.
- Market practices that could be oriented to encourage longer-term thinking and investment at public companies. For example, it would be informative to explore the extent to which certain activist practices, such as “empty voting” (e.g., acquiring voting rights over shares but having little or no economic interest in the shares), are factors that drive short-term focus.
The date, agenda items, panelists, and other details of the roundtable reportedly will be announced shortly. Members of the public who want to participate are invited to contact SEC staff at roundtable@sec.gov. Public input on the impacts of short-termism on our markets and whether our reporting system or other regulations should be modified to address these concerns may be submitted here.
See the Society's comment letter on the SEC's "Request for Comment on Earnings Releases & Quarterly Reports," and additional information & resources on our Long-Termism/Short-Termism page.