Most investors would prefer the U.S. Securities and Exchange Commission stick to quarterly reporting rather than requiring semiannual reporting for publicly-traded companies, a survey by the CFA Institute found.
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Meanwhile, some advisors say they aren’t too concerned about a potential change in the cadence of earnings reports and other regulatory filings because they recommend investing in ETFs rather than individual stocks.
Forty-nine percent said they strongly disagreed with requiring semiannual reporting instead of quarterly, while 13% said they somewhat disagreed, according to a report by the CFA Institute. The CFA Institute is a not-for-profit professional association for advisors, investment analysts, portfolio managers and other investment professionals. Only 19% strongly agreed with such a change, and 16% somewhat agreed.
Asked whether the SEC should require semiannual reporting instead of quarterly for certain types of companies only — such as smaller ones, non-accelerated filers or emerging growth companies — 42% of respondents strongly disagreed, while 20% somewhat disagreed. Only 9% strongly agreed, and 18% somewhat agreed.
The survey, which had more than 2,500 respondents, was conducted before the SEC issued its proposal on May 5, which would allow companies to choose semiannual or quarterly reporting. The SEC will accept public comments on the proposal through July 6.
READ MORE: Should advisors even care if SEC green-lights semiannual reporting?
A survey question addressed whether the SEC should continue to allow quarterly reporting even if semiannual reporting becomes required, and 71% of respondents strongly agreed, while 11% somewhat agreed, 9% strongly disagreed and 4% somewhat disagreed.
“Respondents indicated that the benefits of quarterly reporting exceed its costs and expressed significant concerns that reducing reporting frequency could weaken comparability, increase information asymmetries, reduce transparency, and impair market efficiency,” Matthew Winters, senior director of corporate disclosures and information advocacy at the CFA Institute, said in a statement on June 10. “Most respondents believe many companies would discontinue quarterly reporting if it became optional and that investors would ultimately receive less information, not more.”
Half of respondents strongly disagreed when asked if the SEC should allow companies flexibility to choose their preferred reporting frequency or let them change from quarterly to semiannual and back. Twenty percent of respondents somewhat disagreed with both of those, while 10% strongly agreed and 11% somewhat agreed with both.
READ MORE: Frequent financial reporting helps investors predict performance
The CFA Institute criticized the tight time frames of comment periods for five SEC proposals related to reporting, disclosures and more.
“We believe the SEC should defer these proposals and sequence its requests for comment in a meaningful order, with sufficient time for investors to evaluate the proposed changes, the interrelationships among the proposals, and the potential impacts of rules that have yet to be published and for the Commission’s own Division of Economic and Risk Analysis to conduct its own cumulative analysis,” according to a June 11 comment letter to the SEC by Winters and Sandra Peters, senior head of corporate disclosures and information advocacy.
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