00:00We say no. CFA Institute has supported quarterly reporting since the 1950s when Benjamin Graham
00:07was on our corporate reporting committee. And we recently did a survey to look at what our
00:16investor members think about quarterly reporting. What do they think? They think that two-thirds of
00:21them believe that quarterly reporting is essential, that we need to remain doing quarterly reporting.
00:27Where are you on this, Paul? I grew up on quarterlies, but I know our friends in Europe
00:32have semi-annual, and they swear by that over there. What are the folks in Europe, why did
00:38they do it in Europe semi-annual, I guess? What's the advantage?
00:41Well, you know, our survey was global, and we wanted it to be global because investors
00:45invest globally, invest in the U.S., and we wanted to check whether our members supported
00:50quarterly reporting even in semi-annual jurisdictions, and they did.
00:54Okay. Right? So I think there is a lot of notion of it works in those markets, but those markets
01:00are actually much smaller. We included in our report sort of a summary of that. They have
01:07different continuous reporting requirements than the voluntary quarterly reporting we might
01:12have here in the U.S. And, you know, just generally, investors want more timely information.
01:20Okay. What does corporate America say here? What do they want to do? Presumably, it would be
01:25reduce my cost if I didn't have to report so often.
01:28Well, yes. I mean, that's been the narrative, that it will decrease costs, increase the number
01:34of public companies, and result in capital formation. But the SEC's economic analysis really doesn't
01:41strongly illustrate that. They illustrate that the economic analysis will save about $200,000
01:47per company, but they don't actually quantify any of the cost to investors of not having
01:54that information. You're talking to somebody, Sandy, who flunked equipment leasing three times
01:58on the exam. I went down. Thank God there wasn't a CFA level four. Which accounting statement
02:03is most fungible from 90 days to 180 days? The balance sheet, the income statement, or the cashflow
02:11statement?
02:12Well, we always say that the cashflow statement is the most important statement, then the income
02:17statement, and then the balance sheet.
02:19So what happened? Let's go to that. Let's go to free cash. There was an exam, Paul, where
02:24everybody did it, and we all flipped our answer at the end, level two exam, and it was direct
02:30indirect cashflow, and the clouds parted, and I actually passed. On the cashflow statement,
02:36how would you hide behind 180 days versus 90 days?
02:41Well, the challenge will be that the SEC proposal allows you to voluntarily elect semi-annual reporting
02:49or retain quarterly reporting. So the issue is, if you elect semi-annual reporting and you
02:58don't do quarterly reporting, maybe you'll do a press release to keep the insider trading
03:03window open. That's what European companies do. Right. And so the issue is, what will the
03:08disclosure be at that quarterly? Because many companies, investors are asking companies,
03:12would you go, would you retain quarterly reporting? And they're saying yes. But investors aren't
03:17asking another second very important question, which is when you say you're still going to do
03:22quarterly, what does that mean? Are you going to still file a 10Q? Right. Or are you going
03:26to do an earnings release? And what is it going to include? Because most earnings releases
03:30don't include a statement of cashflow today. Hmm. Yeah, I guess that's right. I mean, you
03:35don't, you don't get that until you get the 10Q. In many cases. Yeah. Some companies do
03:39it simultaneously. Yeah. Major shout out, Apple kills with their clarity. Yeah. They're at 4.15
03:45p.m. I don't know. What are the, what's the accounting, you know, the CPAs, the KPMGs of the
03:51world, what are they saying about this? Well, you know, they're, the comment letters were just
03:55due. And there's been about 70,000 comment letters, because there have been several campaigns,
04:02keep it quarterly.org, as well as Wall Street bets that have, that have caused a lot of individual
04:11investors to say they don't want to move to semi annual reporting. So it's actually so many letters
04:17have been coming in, just, they're, they're very delayed in posting them. And it's hard to find what
04:22some of the organizations have said. The accounting firms have been somewhat supportive in their,
04:27in their, in their commentary. And not many companies are actually commenting. Exxon commented
04:34and support semi annual reporting, but many other... Exxon wants semi annual reporting?
04:38Well, they didn't say what they would do exactly, but they, they have, they are supportive of the
04:43SEC's proposal. I don't know.
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