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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.
New York Stock Exchange
Haskins & Sells Bulletin, Vol. 09, no. 11 (1926 November), p. 86-87
|Source||Originally published by: Haskins & Sells|
|Collection||Deloitte Digital Collection|
|Digital Publisher||University of Mississippi Libraries. Accounting Collection|
|Identifier||HS Bulletin 9-p86|