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Why Not Let The Market Decide The Fate Of Quarterly Reporting?

Yesterday, Liz Dunshee revisited the debate over quarterly reporting of financial results. In her post, she notes "the Business Roundtable (BRT) (press release), the National Association of Corporate Directors (NACD) (press release) and the National Investor Relations Institute (NIRI) (press release) have joined the chorus – calling for an end to short-termism by eliminating quarterly earnings guidance." 

My take on the question is a bit less prescriptive and more experimental.  A few years back, I proposed:

"Why not simply let the market decide how often companies should file reports?  If the market truly values quarterly reporting, then companies will be rewarded for hewing to the traditional schedule.  Companies in other circumstances may pursue longer-term objectives.  Investors in those companies may prefer that those companies save money by eliminating the 'nonevent' of a quarterly report. Moreover, a company that publicly announces its intention to report on a longer term basis is providing the market with valuable information - its commitment to the long-term growth of the company."

So, why not let the market decide?

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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