The Securities and Exchange Commission (SEC, the US equivalent of the CVM) intends to move forward with plans to eliminate the requirement for companies to report their financial results quarterly. However, the proposal has not been entirely well received.
Presented in May by SEC Chairman Paul Atkins, the proposal was opened for public comment and received over 200,000 comments, a record, according to The Wall Street Journal (WSJ) .
The comments came from a diverse audience, including non-profit organizations (NGOs), pension funds , academics, and businesses. Many argued that the measure would harm investors, leaving them with less information to make decisions.
According to the newspaper, at least 20,000 comments echoed an anonymous campaign in defense of maintaining the quarterly release of results.
Another approximately 40,000 arguments stated that the proposal "prevents investors like me from accessing information about companies; allows companies to hide; and enables fraud to spread."
One of the comments came from the Little Warrior Foundation, an NGO that works to combat childhood cancer. The organization reported receiving, through a quarterly report, information that one of its potential suppliers had suffered a loss that could compromise its ability to manufacture components used in an immunotherapy clinical trial funded by the foundation.
“Without this information, we would have lost donations and wasted precious time that children with cancer don’t have,” wrote Emily McFadden, co-founder of the organization.
Among those in favor of the proposal is Exxon Mobil . The oil company stated that the change to semi-annual disclosure would not result "in a reduction of relevant or timely information available to investors, since relevant quarterly information is disclosed separately."
The decision to revise earnings disclosure rules gained momentum last year after the Long Term Stock Exchange (LTSE), an American stock exchange operator focused on companies that "prioritize the long term," filed a petition with the SEC to eliminate quarterly earnings reports.
The idea has the support of Donald Trump . The President of the United States has already stated that companies should not be "forced" to disclose quarterly results, arguing that this would represent a saving of resources.
Publicly traded companies in the United States have been disclosing their earnings every three months for over 50 years. Those who advocate for ending this mandatory reporting argue that it could encourage more companies to go public.
Among the reasons cited by companies for remaining private is the time-consuming and expensive administrative work required to list and maintain publicly traded shares, which includes closing financial statements quarterly.
Among those who believe that disclosure rules need to be revised are Warren Buffett and Jamie Dimon , CEO of JP Morgan . In a 2018 article published in the WSJ , the pair advocated for the end of quarterly guidance—not financial statements—arguing that they hinder long-term planning.
The proposal would align the United States with what already happens in the United Kingdom and the European Union (EU) , where companies are required to submit semi-annual reports, but can publish quarterly reports if they wish.
Although the agency is likely to follow through with the proposed change, it may modify the final wording in response to feedback , sources told the WSJ .
