The U.S. Securities and Exchange Commission (SEC) received thousands of public comments on a proposal that could change how often companies report their financial results. Among the most detailed responses came from ExxonMobil’s chief financial officer.
The SEC is considering a rule change that would allow companies to report earnings every six months instead of every quarter. The comment period for this proposal closed on Monday. According to a database created by Ohio State University accounting professor Tzachi Zach, the SEC received 8,080 comment letters as of Tuesday evening. The SEC declined to comment on the exact number of letters received.
ExxonMobil CFO Submits 11-Page Letter on Semiannual Reporting
ExxonMobil CFO Neil Hansen sent an 11-page letter to the SEC in support of the proposal. According to Fortune, a key recommendation in the letter is that semiannual reporting should remain optional. Hansen argued that companies differ in their industries, investor bases, capital needs, and complexity, and should be able to decide whether quarterly Form 10-Q filings provide enough value to justify their cost.
The letter from ExxonMobil is one of thousands submitted during the comment period. The SEC announced the proposed rule and form amendments in May. The change would allow semiannual reports to satisfy interim reporting obligations under federal securities laws.
How the SEC is Analyzing Public Feedback
Professor Tzachi Zach used artificial intelligence to create a database that indexes the public comment letters the SEC receives on the proposal. The database also tracks the sentiment of the comments. As of Tuesday evening, the database reflected 8,080 comment letters.
The large number of comments shows that the proposal has drawn significant attention from investors, companies, and the public. The SEC will now review these comments before deciding whether to move forward with the rule change.
Our Take: Optional Reporting Makes Sense for Different Companies
In our view, the ExxonMobil CFO’s argument that semiannual reporting should be optional is a sensible approach. Not all companies are the same. A large oil company like ExxonMobil has different reporting needs than a small tech startup. Giving companies the choice to report quarterly or semiannually could reduce costs for some businesses while still allowing investors to get the information they need from companies that benefit from more frequent reporting.
The thousands of comments submitted to the SEC show that this is a topic people care about. The SEC should carefully consider the range of opinions before making a final decision.
