4 ms·

IMO it’d be great if going public meant that you had to publish open, online, real(ish)-time dashboards of your company’s core metrics. Like if it’s a metric in

by yashap 5y ago

IMO it’d be great if going public meant that you had to publish open, online, real(ish)-time dashboards of your company’s core metrics. Like if it’s a metric in every quarterly report, it goes in the public dashboard, and has to be no more than X stale (1 hour? 1 day? Something like that). Many public companies already have something like this internally, it’s just really locked down. Open it up and most insider trading goes away.

judge2020 5y ago
I'm no financial expert, but it seems this would uber-stabilize the stock since algorithms (ingesting via scraping or human data entry) would trade near-perfectly based on the statistics, leaving little speculation for retail investors/other impulse trades.
- andruby 5y ago
  Until there is a “fluke” in the data. A bug, or an exceptional change. Things that would normally be corrected in the manual GAAP process before reporting. But now all the algorithms crash or bubble the stock price and a lot of people loose money. I’d love to see such (near-)realtime metrics though
- skybrian 5y ago
  No, because even assuming an efficient market, future earnings are still uncertain, people will have different opinions about them, and that's most of the ballgame.
- bwilliams18 5y ago
  That assumes that everyone, and every algo would take those metrics and translate and interpret them into a consistent share price. The value of any company, is only loosely linked to it's performance at any given point in time, and is highly dependent on assumptions (eg. rev. vs. cost growth) over time. This would reduce the information disparity between insiders and the market, there's still plenty of room for speculation.
toast0 5y ago
There's a lot of work that goes into verifying the numbers before they're reported, and you really can't do that on an hourly basis, and a daily basis would really be pushing it. Generally Accepted Accounting Principles aren't always entirely straightforward to apply; you can't just look at the bank balance every day, and internal dashboards don't have the same rigor that reported data must have.
- yellow_lead 5y ago
  Yep, and if you issue the wrong number, your company is legally obligated to issue a correction, done in an 8-K usually I believe. And this is very much frowned upon by investors (not the correction, but making the mistake in the first place).
  - TeMPOraL 5y ago
    How does investors dissatisfaction with a company making such mistake manifest itself? I assume they won't divest just for the sake of punishing the board.
    - spdionis 5y ago
      Future investors would avoid the company?
    - filoleg 5y ago
      Quite a few of board members are the investors, if I understand it correctly. As for how their dissatisfaction could manifest, they could vote the CEO out and put someone else in that position who will revert that level openness instantly.
    - yellow_lead 5y ago
      They may not simply for punishment but because they lost trust in the company's ability to accurately report financials (depends on discrepancy in financials, # of misreports, etc)
- laurent92 5y ago
jjallen 5y ago
This seems like it could make public companies even more short-term focused. Execs would be wondering on an hourly basis what stockholders, etc. are thinking about metric fluctuations.
rossmohax 5y ago
Great idea. Although it is probably unrealistic for accounting data (profits, losses, cost of sale, etc), other types of data are indeed likely already present in internal systems with at least daily resolution: number of live accounts to show signups and closures, median watch time, total number of hotel bookings made, mining ore yield, vehicle occupancy and miles run for logistic companies, number of cars serviced, etc. SEC could make a list of required realtime reporting metrics by industry and mandate this information to be published with delay no more than X days.
option 5y ago
this would disincentivize going public even more. There should be (reasonable) limits to regulatory burdens.

by yashap 5y ago

judge2020 5y ago

I'm no financial expert, but it seems this would uber-stabilize the stock since algorithms (ingesting via scraping or human data entry) would trade near-perfectly based on the statistics, leaving little speculation for retail investors/other impulse trades.

andruby 5y ago
Until there is a “fluke” in the data. A bug, or an exceptional change. Things that would normally be corrected in the manual GAAP process before reporting. But now all the algorithms crash or bubble the stock price and a lot of people loose money. I’d love to see such (near-)realtime metrics though
skybrian 5y ago
No, because even assuming an efficient market, future earnings are still uncertain, people will have different opinions about them, and that's most of the ballgame.
bwilliams18 5y ago
That assumes that everyone, and every algo would take those metrics and translate and interpret them into a consistent share price. The value of any company, is only loosely linked to it's performance at any given point in time, and is highly dependent on assumptions (eg. rev. vs. cost growth) over time. This would reduce the information disparity between insiders and the market, there's still plenty of room for speculation.

toast0 5y ago

There's a lot of work that goes into verifying the numbers before they're reported, and you really can't do that on an hourly basis, and a daily basis would really be pushing it. Generally Accepted Accounting Principles aren't always entirely straightforward to apply; you can't just look at the bank balance every day, and internal dashboards don't have the same rigor that reported data must have.

yellow_lead 5y ago
Yep, and if you issue the wrong number, your company is legally obligated to issue a correction, done in an 8-K usually I believe. And this is very much frowned upon by investors (not the correction, but making the mistake in the first place).
- TeMPOraL 5y ago
  How does investors dissatisfaction with a company making such mistake manifest itself? I assume they won't divest just for the sake of punishing the board.
  - spdionis 5y ago
    Future investors would avoid the company?
  - filoleg 5y ago
    Quite a few of board members are the investors, if I understand it correctly. As for how their dissatisfaction could manifest, they could vote the CEO out and put someone else in that position who will revert that level openness instantly.
  - yellow_lead 5y ago
    They may not simply for punishment but because they lost trust in the company's ability to accurately report financials (depends on discrepancy in financials, # of misreports, etc)
laurent92 5y ago

jjallen 5y ago

This seems like it could make public companies even more short-term focused. Execs would be wondering on an hourly basis what stockholders, etc. are thinking about metric fluctuations.

rossmohax 5y ago

Great idea. Although it is probably unrealistic for accounting data (profits, losses, cost of sale, etc), other types of data are indeed likely already present in internal systems with at least daily resolution: number of live accounts to show signups and closures, median watch time, total number of hotel bookings made, mining ore yield, vehicle occupancy and miles run for logistic companies, number of cars serviced, etc. SEC could make a list of required realtime reporting metrics by industry and mandate this information to be published with delay no more than X days.

option 5y ago

this would disincentivize going public even more. There should be (reasonable) limits to regulatory burdens.