CII Defends Quarterly Reporting
The highly influential Council for Institutional Investment (CII) have joined XBRL US and the CFA Institute in voicing their support for the SEC’s current quarterly reporting system.
In December the SEC posted a request for input on the effects of mandated quarterly reporting and earnings releases. They were looking for comments on the nature, content and timing of reporting, with an aim to reduce the burden on filers without degrading the quality of essential information.
The CII’s comment letter defends the current quarterly reporting system, arguing that ensuring timely, accurate information flow is a key underpinning of the US’s efficient markets, as investors can regularly and accurately assess progress.
Further, the CII suggest that the processes reports undergo – including review, and XBRL tagging – fosters accountability, confidence and trust in financial information, and leads to an overall increase in the reliability and usefulness of financial statements.
In response to critics who believe that quarterly reporting encourages short-termism, the CII argue that less frequent reporting would lead to more market volatility as investors attempt to second-guess companies and overreact to inaccurate information. Instead, the CII recommend discouraging forecasting earnings guidance – which they say is predictive and speculative.
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