Page 51 - Kiplinger's Personal Finance - November 2018

AHEAD

research and development)
INTERVIEW
dropped slightly when
THE PROBLEM WITH quarterly reporting was
QUARTERLY REPORTS introduced in 1970.

What else contributes to the
Requiring companies to post results too often short-term thinking? When
may discourage long-term investment. companies release forecasts
of their upcoming quarterly NO DOUBLE DIPPING
earnings, which isn’t re- NEW RULES
quired by the SEC, and then
Charles K. Whitehead is you’re going to focus on hit-
fail to hit that number, the FOR MOBILE
a professor at Cornell Law ting three-month numbers. result can be devastating
School who specializes in Company executives don’t for the company. DEPOSITS
corporations, financial think about three years
Another factor is the
markets and business down the line; they think
average tenure for CEOs is
transactions. about the company three
months down the line. declining. If you’re a CEO, When you use your bank or
President Trump recently That’s not very healthy. are you thinking eight years credit union’s mobile app to
out if your firm’s average deposit checks, you may have
asked the Securities and Ex-
term is six years? Maybe to start adding more-detailed
change Commission to study Would a move to six-month
not so much. wording below your signature
whether publicly traded com- reporting reduce short-term to ensure that your check will
panies should report earnings thinking? It could help. Re-
What would be the downside be accepted. The change is
on a six-month basis. What’s viewing and signing off on
of less-frequent reporting? designed to address concerns
the problem with quarterly the Form 10-Q, getting on The cost is less information
reporting? You manage what the phone with reporters, that customers may deposit
you measure. dealing with the brou- in the public marketplace, a check via mobile app with
and that has ramifications. one bank and later deposit
When you’re haha of press reports
Giving investors less infor- the original check at a second
assessed on and analyst commen- mation to act on would
three-month tary—all of that chews likely increase speculation institution. In a rule issued this
summer, the Federal Reserve
results, up time. Having to do
in the stock market. Execu- said the first bank can avoid
that twice a year rather
tives, then, would face even taking a loss if the customer
than four times frees greater pressure to avoid
up resources. And showing, say, a short-term writes “for mobile deposit
only” or similar phrasing on
there is some
decrease in profits, even if the check. The Fed hopes the
historical evi-
the company is spending rule will minimize fraud and
dence that in-
vestments by for a future project. accidental double deposits.
If your bank is updating
companies in
What should investors take its preferred language for
longer-term
away from the President’s endorsements, it may notify
projects (for message to the SEC? The
example, you by e-mail or post an an-
White House, the SEC nouncement on its website.
and even some prominent Or check its app—instructions
Democrats are interested may pop up as you are making
in a longer-term approach a deposit.
to corporate management. If your endorsement doesn’t
But none of these factors, match the bank’s model, it
be it quarterly reporting or may reject the deposit. But
earnings guidance or CEO many banks will accept the
tenure, will solve the prob- check and later tell you how
lem in isolation. All those to write the endorsement,
things need to be wrestled says Matt Kriegsfeld, of Mitek,
with. It’s going to be a long a mobile-deposit software
time coming. RYAN ERMEY developer. LISA GERSTNER

12 KIPLINGER’S PERSONAL FINANCE 11/2018 PHOTOGRAPH BY BRETT CARLSEN

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