Finance Pros Find Less Information In More Disclosure

March 26, 2001 ( - More than half of financial professionals believe that new disclosure rules have reduced the amount of security information available, while nearly three-fourths believe it has contributed to market volatility.

According to a survey released today by the Association for Investment Management and Research (AIMR), 57% of analysts and portfolio managers say the volume of substantive information released by the public companies they research has decreased since the SEC’s Regulation FD (“fair disclosure”) took effect last October. 

A comparable number (56%) also say that the quality of the information provided as decreased.

Only 14% say the volume of substantive information has increased, while just 15% say the quality has increased.

Failure to Communicate? 

A large majority (81%) of the survey respondents agreed with the statement “Now that Regulation FD has gone into effect, companies that want to minimize communication with investors can do so more effectively.”

A full 71% said that Regulation FD has contributed to market volatility in some fashion. 

  • 25% – a lot
  • 34% – some
  • 12% – a little

Many respondents to the survey suggested that the increased volatility was a result of less earnings “guidance”, and thus more earnings surprises.  To that end, 84% said that corporate management now requires a “clearer understanding of what constitutes materiality,” while more than two-thirds found the same true of investment professionals.

Get It In Writing

While almost two-thirds (62%) found that candor in oral comments has deteriorated, and more than half (52%) found that less clarity in those comments, written comments fared much better.

Nearly a third (31%) say that the frequency of written information has improved, compared with 22% who fell it has declined.  Meanwhile, 27% say the timeliness of written communication has improved, versus just 18% who find that it has slackened.

Nearly half (43%) of investment professionals say their confidence in the accuracy of their own corporate earnings forecasts has declined, versus only 4% who now have increased confidence in their own forecasts.

AIMR, a non-profit professional organization with 49,000 members in 97 countries, sent the survey electronically in early February to more than 6,000 of its US members who are equity analysts, fixed-income analysts, credit analysts and portfolio managers. AIMR received 423 useable responses – a 7% response rate.

– Nevin Adams

A copy of the survey data, as well as AIMR comment letters on the original rule proposal, are available at AIMR’s Web site, .