Quarterly reporting essential in disclosure-based regime

IS quarterly reporting (QR) really needed? It depends on who you ask.

On the one hand, advocates of QR such as regulators, auditors and investors argue that more frequent reporting helps the market keep tabs on companies and aids investment decision-making. On the other, companies argue that the costs of compliance outweigh the limited benefits because of the short-termism and share price volatility that QR encourages.

To arrive at some compromise and bridge this divide, some countries set a size requirement for QR. The rules here, for example, require only companies with market capitalisation above $75 million to release quarterly reports, which means shareholders of smaller firms have to make do with only interim updates. Even so, many exempt companies are still against the idea of QR, and ever so often the subject of scrapping the practice is raised for discussion.