The impact of short-term quarterly reporting rules on capital markets and possible changes will be discussed this summer at a Securities and Exchange Commission staff roundtable, Chairman Jay Clayton said Monday.
"While the problems associated with short-termism have garnered increased attention, there is a need for further dialogue on the causes of and potential solutions to the issue," including new rules to foster a longer-term performance perspective, Mr. Clayton said in a statement.
The SEC in December asked for public comment on whether quarterly reporting "may be causing companies to disproportionally focus their time and resources on short-term results," he said.
Topics for the roundtable, which has not been scheduled, may include whether current reporting rules discourage private companies from going public, and whether some activist practices drive short-term focus.
In August, President Donald Trump asked the SEC to consider halving the number of times public companies are required to disclose information to the public, saying in a tweet that six-month reporting "would allow greater flexibility & save money."
The Council of Institutional Investors supports quarterly reporting because it benefits investors, companies and other market participants and provides important historical information, said Amy Borrus, deputy director, in an email.
"The idea that quarterly reporting encourages short-term thinking by management isn't supported by empirical evidence," Ms. Borrus said. "Less frequent reporting would likely lead to greater share price volatility, and more intense investor focus on short-term share price fluctuations because investors would spend more time guessing how the company is doing."
The roundtable could address problems with companies voluntarily offering quarterly earnings guidance, "which can incentivize companies to focus too much on making the numbers," she said.
