Regulation Fair Disclosure (Reg FD) ... and Beyond.

• Author: Heffes, Ellen M.
• Position: Financial Reporting

Enacted by the Securities and Exchange Commission just over a year ago, Regulation Fair Disclosure, known as "Reg FD," seems to be accomplishing its promise for fair and equal disclosure of companies' financial information by requiring public companies to disclose all material information to the general public at the same time as to analysts and other selected parties.

Significant findings from an annual PricewaterhouseCoopers LLP survey of 201 publicly held U.S. corporations across industries and market cap sizes include:

* 88 percent said Reg FD should be continued; 10 percent said it should be repealed.

* 68 percent said the SEC should issue specific guidelines about what information is and is not "material;" 27 percent said such guidance is not needed.

* 75 percent overall reported no impact on their company's stock price; 18 percent were uncertain and 7 percent noted a change (6 percent negative; 1 per cent positive).

* More than 90 percent said Reg FD either increased fairness (46 percent) or provided about the same level of fairness as before (45 percent); 7 percent said it decreased fairness.

* 38 percent said it would be more effective if it had stronger "safe harbor" protections; 53 percent said that would not change the effectiveness.

"Despite the dire predictions of the securities industry, the overall impact has not been onerous, but the risk of litigation clearly bears watching," said Frank Brown, global leader for Assurance and Business Advisory Services for PWC.

"All the dramatic negative things that people were predicting to happen, didn't come close to happening," said Robert G. Eccles in an interview. Eccles is a founder and president of Advisory Capital Partners Inc. (ACP), a senior fellow of PWG and co-author of The ValueReporting Revolution; Moving Beyond the Earnings Game. In fact, Eccles says that around the anniversary of Reg FD, a program he was invited to speak at - to present his positive opinion on the rule - was cancelled. The problem: the source sponsoring the event couldn't find a negative voice.

Eccles says he found striking the companies' point of view, expressed in the survey, that Reg FD was really working pretty well. While there's no hard evidence that the world has become dramatically more transparent yet, "it certainly is moving in the direction of greater transparency," he says.

Further, says Eccles, "Reg FD gives companies a great opportunity to quit playing the earnings game, because they can't...