Further to our blog and SEC Chair Clayton's SEC Oversight Hearing testimony before the Senate Banking Committee last week (also reported on here), the SEC issued this morning a Request for Comment on the nature, content, and timing of earnings releases & quarterly reporting.
The SEC's release highlights these aspects of the Request:
- The nature and timing of disclosures that companies must provide in their Form 10-Qs, including when the Form 10-Q disclosure requirements overlap with the disclosures companies voluntarily provide in their earnings releases furnished on Form 8-K.
- How the SEC can promote efficiency in periodic reporting by reducing unnecessary duplication in the information that companies disclose, and how any such changes could affect capital formation, while enhancing or - at a minimum - maintaining, appropriate investor protection.
- Whether SEC rules should allow reporting companies, or certain classes of reporting companies, flexibility as to the frequency of their periodic reporting.
- How the existing periodic reporting system, earnings releases, and earnings guidance (either standing alone or in combination with other factors) may affect corporate decision-making and strategic thinking, including whether these factors foster an inefficient outlook among reporting companies and market participants by focusing on short-term results.
The Request purportedly is aimed at building on the input the SEC received on quarterly reporting in response to its April 2016 Concept Release on Business & Financial Disclosure Required by Reg. S-K (see Questions #278 - 285).
SEC Chair Clayton commented:
There is an ongoing debate regarding the effects of mandated quarterly reports and the prevalence of optional quarterly guidance. Our markets thirst for high-quality, timely information regarding company performance and material corporate events. We recognize the importance of this information to well-functioning and fair capital markets. We also recognize the need for companies and investors to plan for the long term. Our rules should reflect these realities. I look forward to receiving thoughtful comments as we think about ways to encourage long-term investment in our country.
The comment period will remain open for 90 days following publication in the Federal Register.