SEC Chair Jay Clayton directed staff to consider the causes of "short-termism," including the current disclosure regime, and how to encourage U.S. companies to take a long-term perspective.
In preparation for an upcoming SEC staff roundtable, Mr. Clayton asked staff to examine:
- whether and how short-termism may be affecting the declining number of public companies;
- how the SEC could reduce compliance burdens while fostering better disclosure for long-term investors;
- potentially allowing certain reporting companies flexibility in determining the frequency of their periodic reporting; and
- market practices that could be used to encourage "longer-term thinking and investment at public companies."
Details for the roundtable (i.e., date, agenda items, panelists and moderators) will be made available as they are finalized.
Commentary / Steven Lofchie
The notion that the management of public companies is too short-term in its thinking seems a concept, or a conceit, invented by politicians who wish to assert that they can be trusted to take the long view (and therefore should be running the economy, or at least reelected). If management is too short-term in its thinking, that can only be because public investors are too short-term in their thinking. How would the SEC propose to fix that problem with the public, short of putting Valium in the water supply or convincing investors not to look at their cellphones every five minutes? The best that one can hope for is that the SEC will lose interest in this issue, and move on to the next big thing, before any fix is attempted.
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