Earnings Reports Quiet Periods Earnings Reports Quiet Periods
The second type of quiet period is one enforced around the time when a publicly traded company releases its quarterly earnings reports. Earnings reports often have a substantial impact on a stock’s market price when they are initially released. Large deviations from the earnings projections of market analysts can cause a sharp rise or dramatic decline in a stock’s price.
Thus, the SEC again has a vested interest in trying to assure a level playing field, that no investors have an advantage, or be at a disadvantage, due to advance information about earnings reports leaking out to some people early.
The earnings report quiet period is applied to the time frame that covers the four-week period that precedes the end of a company’s fiscal quarter and extends to the actual date and time of the earnings report being released (most companies release their earnings reports within a month or two of the end of the quarter).
Again, the quiet period prohibition is essentially enforced against anyone who works for the company or who is connected to the company in a manner that may provide them access to inside information – that is, material, non-public information.
The SEC has laid down very specific rules regarding the dissemination of information contained in quarterly earnings reports. A company must adequately publicize its upcoming earnings report and the accompanying analyst meeting or conference call to discuss the report by doing all of the following:
- Issue a press release regarding the earnings report through PR Newswire
- Copy the press release to the SEC via Form 8-k
- Publish information about the earnings report release and discussion conference call on its company website
Additionally, when an analyst meeting or conference call is held where company executives discuss the earnings report, the meeting must be broadcast via the internet and/or by conference call, with access freely available to any and all interested parties.
Because of the earnings report quiet period regulations, company CEOs and board members often simply do not grant any interviews to financial journalists or market analysts during the quiet period. It is important to avoid even the possible appearance of communicating insider information, and absolute silence is the practice most likely to ensure compliance with quiet period regulations.