Semiannual Reporting Would Benefit SmallCap Companies the Most
Semiannual Reporting Would Benefit SmallCap Companies the Most
A recent Wall Street Journal article by Tatyana Shumsky discusses how a “Move to Semiannual Reporting Would Benefit Small Companies the Most.”
Last month, President Trump asked federal regulators to look into changing quarterly reporting requirements for public companies to semiannual requirements.
In a mid August, President Trump tweeted “In speaking with some of the world’s top business leaders, I asked what it is that would make business (jobs) even better in the US. ‘Stop quarterly reporting & go to a six month system,’ said one,”
“That would allow greater flexibility & save money. I have asked the SEC to study!” he added.
The move has long been supported by some as a way to decrease short-term focus and increase long-term planning.
Critics say the potential move will reduce transparency.
According to Shumsky, Accelerated and large accelerated filers paid audit fees of $541 per $1 million of revenue to their independent auditors in 2016 while smaller reporting companies that recorded revenue in 2016,paid $3,345 per $1 million in revenue.
Shumsky writes “The disparity reflects the fixed costs involved in performing annual audit and review work, as well as the economies of scale that can make large companies more efficient. For smaller companies, absolute costs matter more because they represent a greater share of potential profit.”
SmallCap management teams also spend a great deal of time preparing, organizing, and communicating quarterly statements.
Learn more Here.
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