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Companies are one step closer to receiving the option to skip filing quarterly reports.
The Securities and Exchange Commission on Tuesday proposed allowing public companies the option of filing semiannual reports instead, my colleague Corrie Driebusch reports. The proposal, which The Wall Street Journal previously reported was in the works, will open to a 60-day public comment period. It’s part of the regulator’s push to “make IPOs great again.”
Key context: Publicly listed European companies aren’t required to report quarterly financial results. Many of the companies that provide full financials twice a year also give some update to investors on the off quarters, sometimes in the form of sales or revenue updates.
Some investors could take issue with the changes, given they rely on the transparency of regular disclosures, Kelly Cloonan reports.
Executive perspective: Some companies have argued they can maintain transparency in their disclosures while reducing the frequency of reports, which they say pose burdensome costs. “Would I rather spend the money investing in the business? The answer is yes,” Kunal Kapoor, chief executive of Morningstar, the financial-services firm, told me Tuesday. “We would plow it into the areas that we're focused on, including AI and driving public-private convergence.”
Morningstar hasn’t decided yet whether it would voluntarily provide quarterly disclosures if the rule changes, Kapoor said.
“There's an enormous amount of administrative burden that goes into filing quarterly earnings,” Lumen Technologies CFO Chris Stansbury said. “I love the fact that we could take some of our finance resources and focus it on driving the business forward rather than on filing. I strongly feel we shouldn't be dark with investors and only talk to them twice a year. If this were to go through, you would see us continue to engage with customers on a quarterly basis, but we'd be really focused on the metrics.”
Rivian Automotive CFO Claire McDonough said: “Given where Rivian is from an overall growth standpoint, I do believe quarterly updates with our broader stakeholders in the investment community are important to continue to show the progress that we're making. We would anticipate having the same level of transparency with our investor base.”
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