The Managed Funds Association (MFA) is urging the Securities and Exchange Commission (SEC) to reconsider its proposal to allow public companies to release earnings reports semiannually rather than quarterly.
Quarterly reporting gives investors regular, material information to evaluate companies, allocate capital, monitor risk, and hold management accountable. Reducing required reporting to twice a year could widen information gaps, weaken price discovery, dampen liquidity, reduce comparability across public companies, and increase reliance on voluntary disclosures and market rumors. It would also raise costs for investors, said MFA.
“The alternative asset management industry supports efforts to make U.S. public markets more attractive, but it is essential that public companies provide timely, material information to investors looking to make informed decisions,” Bryan Corbett, MFA president and CEO, said.
In a letter to the SEC, MFA asserted that the SEC should consider changes to public company reporting holistically. Other anticipated reforms to Regulation S-K, as well as detailed proposals on filer status and Form S-3 eligibility potentially offer greater benefits while also directly affecting issuer compliance costs and the fullness of information investors receive.
Craig Lewis, professor of finance, emeritus at Vanderbilt University and former chief economist of the SEC, and MFA Head of Research Ron Alquist submitted a separate assessment of the SEC’s economic analysis.
They determined that although the SEC’s analysis estimates compliance savings, it does not take full account of the investor and market costs associated with reducing the frequency of public company disclosures.