The speed of information flow and document transmission has heightened expectations for turn-around and performance. The on-line and access world has created an environment in which results can be quickly and widely disseminated and rumours can spread rapidly and anonymously. This environment has created new challenges for preparing and reporting financial results, dealing with unexplained price fluctuations and rumours and managing inside information.
Public companies face enormous pressures today.
The environment is such that share prices can decline dramatically on the basis of reported earnings in a single quarter. The temptation to distort earnings to meet expectations is enormous. Corporate counsel are increasingly called upon to assist in orchestrating the release of less than stellar financial results in a manner designed to lessen the impact on the market. The regulators appear less than confident that these pressures are being withstood. Corporate counsel should be cognizant of the regulatory response to these concerns.