Yeah I don’t know if it will lower cost. Companies still go through this process once a month in the monthly close. There is a big push to make the numbers every quarter though. Every level of management feels the pain in their division if they don’t make it. I feel like bi-annual reporting would force companies to be a bit more transparent, or shady one more time before they throw a 6 month Hail Mary before going bust.
This is dumb. Cutting back to biannual reporting and the costs of change are minuscule having touched pretty closely with that space in the past. It’s the same process but cut back to lower frequency and month end closes are far less complex without the regulatory requirements the benefit would be real in several measures. Beyond that, people who actually understand business like Buffett have been abundantly clear about the need to get away from quarter to quarter shortermism. Any reasonable value investor understands how destructive this management and investor mindset is and it has become worse with the SS increasingly trying to justify its existence. Buffett actually published within the last year trying to move teams off of quarterly guidance etc. All of the non-US world works on a biannual basis and somehow gets by…
cost isnt really the issue. typically back office shit like this is not that huge of an impact for large cos. transparency is the real issue. investors would prolly want more transparency. while ceos want less transparency. for investment peepz this quarterly stuff give you more work. the real question is is the work worth it?
buffett argues that the transparency is actually counterproductive. in terms of management decisions favoring short term results or as well as investor reaction to every quarter. perhaps less reporting will lead to lower volatility etc. also some cos have quarterly seasonality so its kind of annoying to view from a quarterly perspective.
I have to believe changing reporting from quarterly to every two years will save some costs. Now if it’s just going from quarterly to semiannual reporting, I guess I agree with you.
That isn’t really accurate for a lot of small to mid caps its a big burden, as is the extra hiring of auditors. It’s also a huge distraction. Dimon made the same point as Buffett. Again, the people who actually know a lot about business seem to agree. Also, reporting half as frequently doesn’t really decrease transparency, it just reduces the focus on quarterly noise and timing.
Any savings will probably be incremental, but that doesn’t mean that the change is not worth considering. Small cost savings can still be meaningful if spread across all companies, forever - until the rule is changed again. That is why stable genius Trump has directed for a study.
Why is quarterly reporting the best frequency anyway? This seems quite arbitrary. Why not semi annually, three times a year, or maybe even more frequently? Just because we do something one way today doesn’t mean that is optimal forever, especially since means of communication, or other factors have changed over time.
I thought about poking at the “biannual” vs semi-annual alleged mistake by BS. However, after some research, biannual is the same as semi-annual, notwithstanding that bi-monthly is every other month and semi-monthly is twice a month. Every other year is biennial. Don’t ask me why. I just follow the rules.
Companies set the expectations for their quarterly numbers. I think the whole quarterly pressure stuff is over blown. Yes, I’ve had lots of conversations with hedge funds getting elated because they found a missing penny in guidance. But I’m still not convinced. Six months or three months doesn’t seem very different to me.