Quarterly audits;

              86 H A S K I N S & S E L LS November
Quarterly Audits
THE New York Stock Exchange has long
adhered to the very laudable policy
of making available to those who desire to
buy or sell corporate stocks and bonds, all
information possible concerning the finan­cial
standing of the corporations whose se­curities
are listed on the "big board." A
sincere effort has been made to secure the
publication of all material facts, for the
benefit of the investing public.
Companies enjoying the privileges of the
Stock Exchange must agree to submit fi­nancial
statements periodically. Until re­cently
these statements have been ren­dered
annually in most cases. During the
past few years, however, the Stock Ex­change
has been exerting its influence in
the direction of obtaining financial state­ments
at more frequent intervals.
A number of corporations—particularly
those whose securities have been listed
recently—have entered into an agreement
with the Stock Exchange to make public
quarterly statements of financial condition
and earnings. The number is increasing
constantly. Early last summer the Stock
Exchange addressed a letter to all corpora­tions
represented on its board who had not
made such an agreement, with a view to
securing their cooperation in this respect.
The letter said in part:
"We are impressed with the insistency
and the character of the public interest in
this question, and we believe that you
would be rendering a real service to the
business world at large by placing yourself
alongside of the ever-increasing number
of corporations who have decided to make
information in regard to their affairs
more frequently available to their share­holders."
There can be no doubt as to the general
desirability of such course. Complete and
trustworthy information regarding the
financial affairs of corporations whose se­curities
are widely dealt in, should be made
available to the public at frequent inter­vals.
Only then can our great exchanges
perform their proper function in making
true prices for the securities to which they
supply a market. This is particularly true
in view of the large number of corporations
whose securities are active, and the many
kinds of securities offered. The need is the
greater because of the wide participation in
corporate issues on the part of the small
investor.
Frequent rendition of financial state­ments
perhaps would accomplish some­thing
towards lessening speculation and
diminishing exploitation of the uninformed
by insiders. Considered from the point of
view of the public, speculation is an evil
because it tends to distort the picture and
to set a false price not based on values and
earnings. There are instances in which
those on the inside of a corporation's
affairs have used to the disadvantage of the
public, news concerning the company
which was not known to the latter. These
malpractices thrive in the dark. As more
light is let in, they tend to disappear.