The quarterly reporting requirement has amazing effects that are hidden and not well understood.

Author: NedoftheHill (22325 Posts - Joined: Jun 29, 2011)
Posted at 3:44 pm on Feb 9, 2019

I worked for a public company as well, and it was much more important to meet next March's expected numbers than it was to invest in long term health of the company. Every frickin' quarter they came to me to ask me if I could pull revenue in to help us make our numbers. My answer was always, "Yes, but I will leave 2/3 of my revenue on the table." Shockingly, they often said, "Do it." At some point, you've left a shit-ton of money on the table, money that could be used to develop new technologies and build new manufacturing lines and hire new people...all because stock purchasers need their quarterly report which 99% of them don't read...all so the company doesn't suffer a quarterly drop in stock price.

Granted, I'm not a finance guy by training, so I will defer to others. It just seemed like we were consistently engaging in short term beneficial, long term destructive behavior. We seem to be destroying US stockholder long term value because of these requirements...granted, the stock holder can eventually sell, but that leaves the employees of the company holding the bag, or finding other jobs. Every government requirement has an unintended side effect. Measuring behavior changes behavior. At some point, will we recognize that our search for perfection is just causing all the good but non-perfect companies to suffer...and therefore their employees to suffer...and therefore the country as a whole?


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