Statement at the SEC Staff Roundtable on Short-Term / Long-Term Management of Public Companies, Our Periodic Reporting System and Regulatory Requirements

Chairman Jay Clayton

July 18, 2019

Bill [Hinman] thanks a lot. I'm going to highlight three items to try and kick us off here. First, a thank you to Bill, Coy, Shelley and the other staff from the Division of Corporation Finance for the work you did in hosting today's roundtable and on a day to day basis. This event demonstrates the commitment of the Division to important issues that have a direct impact on our Main Street Investors and your commitment to fair and transparent markets.

I also want to thank our panelists. As I look across here if I was investing my money for the long term, this would not be a bad investment committee.

You are giving up your time to share your vast experience with us. You represent a variety of viewpoints from long term investors to issuers, from preparers of SEC reports to consumers of that information. So thank you very much for giving us your time.

Second, I think we need to always keep in mind who we are doing this for. At least from my perspective, it's our long term Main Street investors who invest directly in our markets, but also more the case and I think increasingly the case through funds and pension plans. Having this perspective is -- their perspective -- in mind is I think key to understanding why long term perspective on investing is important.

Put simply, they are investing for the long term and it's their money that's in our markets as they save for retirement or other life events. We think about them every day at the Commission and they're not investing for next week, they're not investing for next year. Predominantly they're investing for something 10, 20, 30 years away and they expect their money to be managed that way.

But we do recognize that their perspective is not exclusively long term. The investment decisions that they make or their advisors make rely substantially on timely and quality disclosure. And it is this timely and quality disclosure that fosters market liquidity that every investor needs at some point in their investment life.

But I believe that there is not a tradeoff between long-termism and liquidity. Said another way, I don't believe that to have effective liquidity you need a short term focus. Too often in Washington we think there's a tradeoff of one thing for another. We should be looking for rules of the road that foster both liquidity and a long term perspective.

Third, today's agenda and the comments we've received so far on our request for comment demonstrate that if we are going to make strides to foster a longer term perspective in American companies, we need to consider these issues from two points of view.

One is to look at the macro forces that drive short term behavior in our markets generally and explore market based initiatives to address them. For example, what drives companies to issue earnings guidance, while others do not?

The other is to look at our disclosure framework and other regulations as a package not as individual items to determine whether they efficiently allow companies to focus on long term performance. For example, can we more efficiently get information to investors that today is included in earnings releases and often repeated in quarterly reports? And does the frequency of our disclosure framework allow companies to focus on the long term performance of their businesses or duly result in quarter to quarter management?

I'll deviate from my prepared remarks as I already have many times, but I'll do it again. Mark and I were having a discussion and I want to address this up front. He made a very insightful point. He said, our macro-economic performance does not indicate that we have an excessive short term problem. Whether that is or is not the case let's accept for a moment that it might be.

I believe that that may be the result of the substantial shift to private capital. And so we should not only be thinking about whether companies across our economy are managing too much for the short term, but whether this might be an issue that's acute to our public markets and not our private markets and what that means for allocation of capital.

With those hard questions but ones that we need to address, I'll turn it over to Commissioner Roisman. And thank you Mark.