New U.S. Chamber CCMC Report Outlines Importance of Effective, Modern Corporate Disclosure System
The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) today released Essential Information: Modernizing Our Corporate Disclosure System, a white paper exploring the future of corporate disclosures and why materiality is, and should remain, the guiding principle for public company disclosure.
“More is not always better. The explosion of disclosures, much of which even institutional investors have said is extraneous, undermines the Securities and Exchange Commission’s (SEC) efforts to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation,” said David Hirschmann, president and CEO of CCMC. “Disclosure of all material information that is critical for investors is a bedrock of our nation’s public capital markets. Moving further away from material disclosures contributes to the steady decline of the number of public companies we have seen over the past 20 years. The decline in IPOs can be slowed, and even reversed, if we focus on solving the reasons why many of today’s fast growing companies are opting either to delay or no longer go public.”
The report, released today at an event of the same name, focuses on corporate disclosure modernization, provides a history of materiality, explains why it matters, and covers topics including why the SEC should steer clear of special interest disclosures; why policymakers should be wary of information overload and should be sensitive to lack of investor interest; and how ineffective disclosure harms the competitiveness of our nation’s capital markets; among other topics.
“An effective disclosure regime provides investors the information they need to make objective investment decisions,” Hirschmann continued. “Public companies should not be mandated under the federal securities laws to disclose information that is not material to a reasonable investor. Efforts to advance social or political goals through SEC-mandated corporate disclosures risks eroding investor confidence in securities regulation and impairing the competitiveness of our capital markets by making it more costly for innovative companies to raise capital.”
CCMC has consistently called on the SEC to adopt a comprehensive approach to modernizing financial reporting policies. You can find CCMC’s recommendations for modernizing our corporate disclosure system in Restarting the Growth Engine: A Plan to Reform America’s Capital Markets.
You can find a full copy of Essential Information: Modernizing Our Corporate Disclosure System here.
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.