Good morning to you all. Jessica Mathews again, filling in for Andrew Nusca.
“This will save money, and allow managers to focus on properly running their companies,” he wrote. “Did you ever hear the statement that, ‘China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis???’ Not good!!!”
The president isn’t the only investor who feels this way. Still, it’s easy to think of some downsides.
In case you didn’t already think tech investing was a wild ride, imagine investors having to speculate what’s going on during six-month waits between reports. Well, maybe you don’t have to imagine that hard. In private markets, startups can be rather selective in what they disclose to investors—and when they choose to disclose it. Investors who don’t have board seats often have no idea what’s going on in a private company unless a startup is gearing up for a fundraise (or if the investors have close connections to the company’s executive team and its board).
There is something to be said for encouraging investors to look at the bigger picture. CEOs have been complaining about quarterly reports for decades. These reports can encourage investors—and therefore the company’s executives and board—to focus on incremental financial metrics and hype versus longer-term product investments and initiatives.
Anyway, it’s a hotly-debated topic—as it should be. The SEC hasn’t made any changes for now. But if President Trump is turning his attention to something, it’s best to pay close attention.
More news below.—Jessica Mathews
