Magazine article Management Review

Death to Quarterly Reports?

Magazine article Management Review

Death to Quarterly Reports?

Article excerpt

DEATH TO QUARTERLY REPORTS?

Are quarterly financial reports "the enemy of American business"? Rep. Don Ritter (R-Pa.) thinks so, and he's offering new life by introducing legislation in Congress that would do away with the current rules that require public corporations to file quarterly statements with the Securities and Exchange Commission. The proposal would not affect annual financial reporting requirements, however.

Ritter introduced his bill in response to growing concern that American firms are too focused on short-term financial results at the expense of long-term investment and strategies that would make them more competitive in the world marketplace (MR July 1990, page 28). This argument is being picked up by an increasing number of policymakers and politicians, including Democratic presidential candidate Paul Tsongas, who is promoting a similar proposal in his White House run (MR October, page 34).

"Short-term industries are short-lived industries," Ritter argues. "The pressure to maximize short-term profits is crippling our ability to invest in the technology, human resources, product quality and capital assets critical to our long-term competitiveness. One fundamental cause of industry's preoccupation with short-term performance is the SEC's requirement that publicly held companies report their financial status on a quarterly basis. It's time we did something to help our companies broaden their time horizons."

Neither Japan nor Germany require firms headquartered in their countries to file quarterly financial statements. …

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