WASHINGTON, July 6 (Reuters) – The investment industry is urging Wall Street’s top regulator to stick to its current practice of requiring quarterly reporting from publicly traded companies, according to the balance of public comment letters available on Monday.
Responses to a proposal to let companies opt for semiannual reporting underscored a divide between investor calls for more disclosure and corporate boardrooms’ hope to be free of earnings season pressures.
Investors say their need for corporate disclosures to make investment decisions outweighs any benefit from eased reporting burdens on companies, which must pay to tabulate and audit their operating results every three months, the comment letters and public statements showed.
The U.S. Securities and Exchange Commission, acting on a public call from President Donald Trump, in May proposed allowing Wall Street-listed companies to switch to semiannual reporting, saying this could deter short-termism among corporate leaders and reduce burdensome accounting and compliance costs.
The agency, however, acknowledged an array of possible risks, such as leaving some investors less well-informed, eroding perceptions of fairness and weakening the monitoring of corporate conduct.
Monday was the deadline to submit comments on the proposal. The SEC declined to comment as to a timeline for any next steps.
JPMorgan, Nasdaq and others have welcomed the proposal, saying it would also bolster capital markets, in part by allowing companies to take a longer-term perspective on their performance.
However, the Investment Company Institute, a lobby group representing mutual and exchange-traded funds, among others, said in a comment letter submitted on Monday that, while it supported easing burdens on companies, a survey of 14 members representing $6.1 trillion in assets showed they overwhelmingly viewed quarterly reports as either highly (62%) or moderately (29%) important.
Survey respondents believed quarterly earnings statements and management discussions of companies’ financial conditions and operating results were particularly important, the letter said.
The Managed Funds Association, which represents hedge funds and other asset managers, likewise called on the SEC to scrap the proposal. Bryan Corbett, its president, said in a statement that timely, material information was essential to investors.
Earlier comments submitted by the California Public Employees’ Retirement System and the American Accounting Association were also opposed, with the latter saying that semiannual rather than quarterly reporting could allow accounting problems to go undetected for longer, “potentially increasing the costs to remediate when eventually discovered.”
The United States has required quarterly reports since 1970 while other countries allow such disclosures twice a year.
(Reporting by Douglas Gillison in Washington; Editing by Edmund Klamann)