As the debate surrounding the impact of quarterly reporting on company management and investor behavior continues, CFA Institutehas completed a survey of its global membership in a report titled “The Case for Quarterly and Environmental, Social, and Governance Reporting,”  which provides valuable data and insights for this discussion.CFA Institute has more than 164,000 members worldwide and is the not-for-profit organization that awards the Chartered Financial Analyst® (CFA) credential (as well as several others).

The report’s executive summary provides an overview of the survey results:

“Respondents, however, indicate that quarterly reports remain more important to investors than earnings releases. These quarterly reports provide a structured information set that follows accounting standards and regulatory guidelines and include incremental financial statement disclosures and management discussion and analysis. In addition, quarterly reports offer greater investor protections as they are certified by the officers of the company, subject companies to greater legal liability, and are reviewed by company auditors.”

The report also provides a discussion of CFA’s position about long-term versus short-term thinking:

“CFA Institute has long contended that when companies focus on long-term strategy, they are looking at a time horizon of three to five years or longer, not six months. Accordingly, extending the reporting period from three to six months would have little impact. We believe that a better approach to deterring short-termism would be to focus on companies’ incentive structures. Companies interested in encouraging a long-term view should consider adopting five-year performance periods in their incentive plans. In addition to incentives, general corporate leadership, tone at the top, and company culture are important contributors to long- vs. short-termism.”

And, as an interesting final note, the survey respondents also weighed in on ESG reporting issues with this overall summary of the results:

“…survey respondents and roundtable participants say that they incorporate governance factors into their investment analysis to a greater extent than they incorporate environmental and social factors. Investors, however, note that ESG means different things to different people. Hence, clear definitions of the terms and related metrics are needed. They also believe that specific ESG and sustainability disclosures should be a regulatory requirement for public companies and that securities regulators should either develop ESG disclosure standards or support an independent standards setter (i.e., a single, global standards setter in this field) to develop such standards.

You can read all the details here, and out thanks to CFA Institute for providing this valuable report and permission to pass it on to you in this post.

As always, your thoughts and comments are welcome!