Every corporate and government jet leaving the ground must turn off all instrumentation, all warnings and all navigation. No fuel gauge, no system warning lights, no altimeter, no GPS, no radar.
Apparently these people believe the less information they have the better. So let's see how they really feel when their lives are at stake and guessing is their only option.
I would argue the simpler point that given that most public companies are computerized now...the SEC should move that an interm unaudited report should be available on a companies website every month with quarterly more indepth reports.
I mean give me a @#$%ing break...Does anyone believe that Jabberwocky industries doesn't know their sales for the month of march in near real time these days? Really? The companies I consult for know this kind of information with no worse than a 24 hour lag for first run data.
Exactly. All companies, both private or public, spit out a monthly P&L. Easy enough to post a condensed copy on their website every month for shareholders to view.
Another great piece!!! As a board member of both public and private companies, i think this will go down as another dumb decision from the current administration. The quarterly reports also force management to be clear with directors as well who also have the job of protecting the company and investors. The whole current regulatory framework is F'd up
The most important financial film ever made (and the most entertaining) was Other People's Money. The Danny Devito speech arguing for the takeover of NE Wire & Cable was a priceless econ lesson all on its own.
I want Larry the Liquidator able to rip the cheese away from every CEO of every public firm in America if they're not doing right by their shareholders. Make corporate raiders great again.
I don't care if they report financials every month. I still don't trust the accounting. I pretty much stopped that when they decided they needed two forms of accounting...non-gaap and gaap. So what's the true picture? Who really knows outside of the companies?
You are completely correct. On the other hand, there is another issue here and really, some solution that helps address both would be good. Having run many private companies and a couple public ones, the incentives laid on public companies are onerous and stupid. I do not mean the reporting per se -- in that you are spot on. But a major share of the value of being a company is instantly lopped off when instead of doing the "right" thing (just like you fear the "wrong" thing which certainly happens) you do the thing that shows some result in two months -- because the entire third month is literally sucked dry by getting ready for the quarterly release. I have been in companies of 100 people and 400,000 people -- the "dead month four times a year" and "focus on these quarterly numbers, not on what is good, or useful, or actually what we do" is ubiquitous.
I expect that the motivation was the decades of a lot of smart people (perhaps even you) noting that bowing and scraping to the quarterly reporting was, at least for the company and its mission, a net negative in dozens of ways. It has nothing to do with the business -- in fact, it virtually always distracts/deprecates the business because focusing on numbers that will support the market when they are released is only tangentially related to the actual things one is trying to do. I expect the thought that halving the number of wasted months each year would be a net positive is what is driving this. (I have no special information, but as an ethical company executive, that is how I would read it and I would be thrilled.)
I suppose the point is whether one views companies as net villains (you cannot check too frequently because they are out to get you) or net good citizens (they are trying to make the business in which you invested as good as it can be and that is a longer period than two months). An investor really wants the latter, but to be protected from the former.
You are financially smarter than I am, I am sure. The question is, how does one actually solve this problem other than hanging onto the "stop the presses and give us some numbers which, in the entirety of view, are always gamed to optimize the view of the business after the next two months of operations (even with no malfeasance whatsoever) rather than how the business is performing and strategically progressing? Six months would be fine if, perhaps, there were some facts released more frequently that would protect the downside case. What would those be that would not require the business to jolt from quarter to quarter?
Hope you decide to contemplate this in another piece.
One problem is that SEC filings are so long and complex. That makes preparation expensive and time consuming for the company and gives the individual investor so much to wade through that many won't bother. Simplification, rather than less frequent reporting, might be the solution that helps issuer and user.
Responsible companies with nothing to hide may still make public quarterly reports, which will make those companies suspect which choose otherwise. Being transparent should influence insurance companies, retirement funds, mutual funds, and institutional investors to stick with those companies submitting quarterly reports.
Well Chris, once again you've hit a nerve, and I have to vent a bit. I have a lingering cold anger at the stupidity, sloth, and corruption of government regulators left over from the GFC fiasco. Back then, the greatest fraud in human history was first enabled by the incompetence, etc., of federal regulators and then, when finally exposed, swept under the table. The result was that essentially no one (well ok, only one guy) was prosecuted for frauds that brought down the entire system and cost taxpayers hundreds of billions of dollars in government bailouts of Wall Street, huge loan guarantees, unsolicited TARP payouts, etc., etc, etc. Meanwhile small financial firms like mine were subject to the scrutiny the entire industry deserved and should have gotten, and those few who messed up (not me and not you, and not anyone I ever knew) were put out of business or even sometimes jailed. The same thing happened to little banks courtesy of the FDIC, while only a few big investment banks and mortgage firms actually went under, at a time when virtually all of the biggest were bankrupt or at death's door.
The relative probity of management and the strength of a firm's balance sheet often had nothing to do with who got saved, or who was given the axe. This was in sharp contrast to the bank closures of the Great Depression, which were far more logical and fair, on average. Indeed, the decisions made regarding individual firms by Bernanke, Paulson and Geithner during the crisis, were often arbitrary and contradictory to their own stated policies.
So the little guys in finance and banking often got severely punished but big Wall Street firms merely paid billions in fines (which added up on average to a single quarter's profits) and continued as before. Much of the TARP money (which in fairness was all eventually repaid) actually went in the short run for bonuses! Bailouts included virtually all of the most fraudulent firms, and Bagehot's Rule was completely ignored by the Fed and the Treasury in the race to socialize the huge private losses. It is astounding that although several massively foolish CEO's taking huge naked (unhedged) risks paid the price by losing their firms, almost none of the biggest fraudsters (people who flagrantly broke the law) faced any real consequences at all. I often wonder how many of these had CEO's who were big donors to Bush or Obama.
I am convinced that the purpose of some in the the leadership at the SEC, FINRA, and other regulators has at times been to provide the appearance of regulation while allowing the biggest players to operate on a business-as-usual basis. All this goes on while said players are committing serial financial crimes, but these are ignored or the players get only a patty slap, provided that they later reliably hire retired regulators who pass through the government's revolving door secretly labeled "Quid Pro Quo."
Every corporate and government jet leaving the ground must turn off all instrumentation, all warnings and all navigation. No fuel gauge, no system warning lights, no altimeter, no GPS, no radar.
Apparently these people believe the less information they have the better. So let's see how they really feel when their lives are at stake and guessing is their only option.
👏👏👏
You are WAY too correct and rational. You must not be AI. Thank you for your logical conclusions. I read every post.
I would argue the simpler point that given that most public companies are computerized now...the SEC should move that an interm unaudited report should be available on a companies website every month with quarterly more indepth reports.
I mean give me a @#$%ing break...Does anyone believe that Jabberwocky industries doesn't know their sales for the month of march in near real time these days? Really? The companies I consult for know this kind of information with no worse than a 24 hour lag for first run data.
Exactly. All companies, both private or public, spit out a monthly P&L. Easy enough to post a condensed copy on their website every month for shareholders to view.
The 21st century has turned out to be everything I didn't think could be.
Welcome to the 21st century.....you have reached a machine....leave a message....
One would hope that well run companies will still announce quarterly, and be rewarded for doing so. Though I’m not so sure in this market…
Another great piece!!! As a board member of both public and private companies, i think this will go down as another dumb decision from the current administration. The quarterly reports also force management to be clear with directors as well who also have the job of protecting the company and investors. The whole current regulatory framework is F'd up
The most important financial film ever made (and the most entertaining) was Other People's Money. The Danny Devito speech arguing for the takeover of NE Wire & Cable was a priceless econ lesson all on its own.
I want Larry the Liquidator able to rip the cheese away from every CEO of every public firm in America if they're not doing right by their shareholders. Make corporate raiders great again.
I don't care if they report financials every month. I still don't trust the accounting. I pretty much stopped that when they decided they needed two forms of accounting...non-gaap and gaap. So what's the true picture? Who really knows outside of the companies?
Good point…sadly.
Well.....if they offered free adult beverages and a free lunch.....then the transformation to being a casino would be complete!
You are completely correct. On the other hand, there is another issue here and really, some solution that helps address both would be good. Having run many private companies and a couple public ones, the incentives laid on public companies are onerous and stupid. I do not mean the reporting per se -- in that you are spot on. But a major share of the value of being a company is instantly lopped off when instead of doing the "right" thing (just like you fear the "wrong" thing which certainly happens) you do the thing that shows some result in two months -- because the entire third month is literally sucked dry by getting ready for the quarterly release. I have been in companies of 100 people and 400,000 people -- the "dead month four times a year" and "focus on these quarterly numbers, not on what is good, or useful, or actually what we do" is ubiquitous.
I expect that the motivation was the decades of a lot of smart people (perhaps even you) noting that bowing and scraping to the quarterly reporting was, at least for the company and its mission, a net negative in dozens of ways. It has nothing to do with the business -- in fact, it virtually always distracts/deprecates the business because focusing on numbers that will support the market when they are released is only tangentially related to the actual things one is trying to do. I expect the thought that halving the number of wasted months each year would be a net positive is what is driving this. (I have no special information, but as an ethical company executive, that is how I would read it and I would be thrilled.)
I suppose the point is whether one views companies as net villains (you cannot check too frequently because they are out to get you) or net good citizens (they are trying to make the business in which you invested as good as it can be and that is a longer period than two months). An investor really wants the latter, but to be protected from the former.
You are financially smarter than I am, I am sure. The question is, how does one actually solve this problem other than hanging onto the "stop the presses and give us some numbers which, in the entirety of view, are always gamed to optimize the view of the business after the next two months of operations (even with no malfeasance whatsoever) rather than how the business is performing and strategically progressing? Six months would be fine if, perhaps, there were some facts released more frequently that would protect the downside case. What would those be that would not require the business to jolt from quarter to quarter?
Hope you decide to contemplate this in another piece.
One problem is that SEC filings are so long and complex. That makes preparation expensive and time consuming for the company and gives the individual investor so much to wade through that many won't bother. Simplification, rather than less frequent reporting, might be the solution that helps issuer and user.
Responsible companies with nothing to hide may still make public quarterly reports, which will make those companies suspect which choose otherwise. Being transparent should influence insurance companies, retirement funds, mutual funds, and institutional investors to stick with those companies submitting quarterly reports.
very true, there will be companies that continue to issue quarterly reports and that will ultimately become a competitive advantage in capital raising
Well Chris, once again you've hit a nerve, and I have to vent a bit. I have a lingering cold anger at the stupidity, sloth, and corruption of government regulators left over from the GFC fiasco. Back then, the greatest fraud in human history was first enabled by the incompetence, etc., of federal regulators and then, when finally exposed, swept under the table. The result was that essentially no one (well ok, only one guy) was prosecuted for frauds that brought down the entire system and cost taxpayers hundreds of billions of dollars in government bailouts of Wall Street, huge loan guarantees, unsolicited TARP payouts, etc., etc, etc. Meanwhile small financial firms like mine were subject to the scrutiny the entire industry deserved and should have gotten, and those few who messed up (not me and not you, and not anyone I ever knew) were put out of business or even sometimes jailed. The same thing happened to little banks courtesy of the FDIC, while only a few big investment banks and mortgage firms actually went under, at a time when virtually all of the biggest were bankrupt or at death's door.
The relative probity of management and the strength of a firm's balance sheet often had nothing to do with who got saved, or who was given the axe. This was in sharp contrast to the bank closures of the Great Depression, which were far more logical and fair, on average. Indeed, the decisions made regarding individual firms by Bernanke, Paulson and Geithner during the crisis, were often arbitrary and contradictory to their own stated policies.
So the little guys in finance and banking often got severely punished but big Wall Street firms merely paid billions in fines (which added up on average to a single quarter's profits) and continued as before. Much of the TARP money (which in fairness was all eventually repaid) actually went in the short run for bonuses! Bailouts included virtually all of the most fraudulent firms, and Bagehot's Rule was completely ignored by the Fed and the Treasury in the race to socialize the huge private losses. It is astounding that although several massively foolish CEO's taking huge naked (unhedged) risks paid the price by losing their firms, almost none of the biggest fraudsters (people who flagrantly broke the law) faced any real consequences at all. I often wonder how many of these had CEO's who were big donors to Bush or Obama.
I am convinced that the purpose of some in the the leadership at the SEC, FINRA, and other regulators has at times been to provide the appearance of regulation while allowing the biggest players to operate on a business-as-usual basis. All this goes on while said players are committing serial financial crimes, but these are ignored or the players get only a patty slap, provided that they later reliably hire retired regulators who pass through the government's revolving door secretly labeled "Quid Pro Quo."
Gotta keep that great bubble bubbling - especially when Midterms are coming up fast.