The National Investor Relations Institute (NIRI) recently completed a survey on quarterly release practices among publicly traded companies and shared the results with the SEC Advisory Committee of Improvements to Financial Reporting (CIFiR). The committee was convened by the SEC in June 2007 with the goal of reducing unnecessary complexity and making information more useful and understandable for investors. Based on its findings and presentation to the CIFiR, NIRI is currently preparing best practice guidelines for quarterly earnings releases.
According to NIRI:
- Added disclosure in quarterly earnings releases has resulted from investor demand and management team philosophy, among others.
- While companies of all sizes use non-GAAP measures in their earnings releases, small cap companies tend to do so less often (31% for companies with a market cap below $100 million versus 70-74% of companies with a market cap in excess of $500).
- Quiet periods surrounding a company’s earnings release average four weeks or more.
- 96% of survey respondents include an income statement as part of their quarterly earnings release and 91% include a balance sheet. The percentages are much lower for cash flow statements (58%) and segment financial information (61%).
In my opinion, the best quarterly earnings releases are those that report a company’s financial results in a clear and concise manner, while providing investors with the color necessary to make an informed investment decision. I’m betting that NIRI’s best practice guidelines will mirror that thought.
— Laurie Berman, Senior Vice President, email@example.com