Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Reporting Frequency Isn’t Only Difference With How Earnings Results Are Shared

By Christine ShortStock MarketsMar 23, 2022 11:47AM ET
www.investing.com/analysis/reporting-frequency-isnt-only-difference-with-how-earnings-results-are-shared-200620681
Reporting Frequency Isn’t Only Difference With How Earnings Results Are Shared
By Christine Short   |  Mar 23, 2022 11:47AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
GM
+4.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BLK
+0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

There are many different ways in which the reporting of corporate events differs in North America versus the rest of the world, whether it be due to business practices or requirements by governing bodies. With Q4 2021 earnings season behind us, we wanted to see how exactly the reporting season differs by region, and what implications there might be. The main differences we found were around reporting frequency, how far in advance a company confirms a report date and where they release that information.

Theme 1: The U.S. reports quarterly, while the rest of the world mostly reports semi-annually

Anyone that follows global corporate earnings is aware of one glaring difference between the way U.S. companies report earnings results as compared with the rest of the world. While the SEC requires U.S. companies to file earnings results quarterly, a majority of international governing bodies only require semi-annual filings (2x a year). In fact, of the companies in the Wall Street Horizon universe (9,500 global equities) that report twice a year, only 14% are North American, the other 86% are international (non-U.S. and Canadian companies).

Company Earnings Reporting Frequency By Country
Company Earnings Reporting Frequency By Country

Why does this matter?

The pros and cons of reporting frequency have been hotly debated in the U.S. for some time, with some pushing for less reporting and others saying more reporting is better for transparency.

Pros:

Proponents of the quarterly structure claim it forces companies to be more transparent. Investors in U.S. companies have more data points to observe, as more frequency equals more history to study. And this, in turn, is a good thing for shareholders.

Cons:

On the other hand, opponents like outspoken BlackRock (NYSE:BLK) CEO Larry Fink argue that quarterly reporting promotes short-termism, and a sort of frenzy around earnings season, when investing should be looked at with longer term goals in mind. Critics from corporate America (Bob Lutz, former vice chairman of General Motors (NYSE:GM)) to politics (Hillary Clinton and former SEC Commissioner Daniel Gallagher), have argued for the same. Even former President Donald Trump weighed in on the matter in 2018, asking the SEC to look into the quarterly practice and determine if it still made sense. He argued a switch to semi-annual reporting would allow companies “greater flexibility” and would save money.

UK Case Study

To understand which of these options is best, it might help to look to a country that has done both. The UK previously sided with the rest of Europe and reported semi-annually prior to 2007. Then, from 2007-2014, UK companies were required to file quarterly, before moving back to semi-annual. Research from the CFA Institute showed that while the frequency of financial reporting had no material impact on levels of corporate investment, “mandatory quarterly reporting was associated with an increase in analyst coverage and an improvement in the accuracy of analyst earnings forecasts.” Most will agree those are two very good things for investors, but some still continue to argue that they may not outweigh the issues of short-termism and the behavior around it, i.e. “quarterly earnings hysteria” as Larry Fink titled it, and “quarterly capitalism” referred to by Hillary Clinton.

CEOs themselves point to short-term earnings pressure from investors as the number one factor promoting short-termism:

Original data from this chart found on page 15 of this EY report: download pdf here: https://www.ey.com/en_ie/long-term-value/sustainable-corporate-governance)

Theme 2: Non-U.S. companies confirm future dates much earlier

Despite the greater frequency, North American companies don’t tend to provide future earnings dates as early as other companies around the globe do. Roughly 24% of North American companies provide future dates, while 76% of worldwide companies do. This, of course, is a good thing and gives investors an earlier idea of what to expect.

The table below shows the average days prior to an earnings date that certain countries confirm. You’ll notice on average the U.S. only gives 19 days notice, only edged out by Canada and India which give less of a heads up. On the high end, Germany gives the marketplace 73 days notice followed by Great Britain at 62.

Source: Wall Street Horizon 2021 data

Theme 3: Time of Day: Mostly only A Thing In The U.S.

When providing an earnings date confirmation, the U.S. also tends to specify a time of day. That can include an exact time, or an indication of before market open (BMO), after market close (AMC) or during market hours. Worldwide companies are often just listed as “unspecified.” International companies that do mention market time include France (CET), Great Britain (GMT) and Brazil (BST).

Theme 4: Where Companies Announce

The medium that companies use to announce earnings dates also varies by region. Most U.S. and Canadian companies announce through press releases (67%), followed by website (11%) and emails (6%). By contrast, most international companies announce via exchange/website (70%), followed by email (13%) and press release (5%).

Theme 5: Dividends

And it’s not just earnings, we also noticed a pattern with dividends announcements. Like earnings announcements, a large majority of dividend announcements for U.S. and Canadian companies come through press releases (91%). For the rest of the world, dividend reporting is variable (and harder to find) by country, but most information comes through websites (69%) and exchanges (18%).

Conclusion

Regardless of whether the U.S. or other countries are doing it “right” when it comes to how they report on corporate events, investors still need to be aware of these differences so they don’t miss anything.

Reporting Frequency Isn’t Only Difference With How Earnings Results Are Shared
 

Related Articles

Reporting Frequency Isn’t Only Difference With How Earnings Results Are Shared

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Muhammad Luqman Firdaus
Muhammad Luqman Firdaus Mar 23, 2022 6:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
$76.000
Muhammad Luqman Firdaus
Muhammad Luqman Firdaus Mar 23, 2022 6:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what do you do
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email