The SEC announced an upcoming roundtable (date and details to come) that will focus on the causes of short-termism, including the role of quarterly disclosures. At the end of 2018, the SEC had published a request for comment regarding the timing of earnings releases and quarterly reports by public companies. The statement regarding the roundtable identifies potential topics for discussion, including the following:
- 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.
- The SEC’s ability to reduce burdens for companies while facilitating better disclosure for long-term Main Street investors. For example, SEC Chair Clayton noted he was 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 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.