WE don’t believe there is any value for investors or companies in continuing the practice of sending full-text news or earnings releases via PR wire services.
As such, we are proposing an alternative model that uses PR wire services as notification systems rather than news distribution systems. This will lead to substantial cost savings for public companies and their shareholders, and facilitate and foster expanded use of the Web for securities disclosure.
What we are proposing: notices not news
Disclosure news releases that are distributed via wire services should simply be notices of where investors can access the news on a company’s website and/or on a public regulatory database.
These “notice-and-access” news releases should include links to the information on the company’s website or regulatory database. Ideally, the links in the notices should go directly to web pages that contain the information being disclosed. At minimum, the links should go to a page that includes a prominent link or links to the information.
The information on the website should be made public simultaneously to the notice being distributed via a PR wire service or immediately after it is disseminated, but never before. Coordinating release times is easy to do if companies have a content management system with scheduling capabilities, or it can be done manually by posting the information once distribution of the notice is confirmed.
The content of notices should be limited to an announcement of the availability of the full disclosure. No information contained in the full disclosure documents should be disclosed in the notice. This will prevent companies from selectively including certain facts in their notices which could be misleading if read out of context of other information in the complete disclosures.
Cost savings to invest in new technologies
Since news releases are almost always accessed electronically on Internet-enabled devices, the electronic notice-and-access model for material news dissemination would not disadvantage any investor more than would be the case under currently approved practices.
Moving to a notice-and-access model would likely result in savings of millions of dollars each year for companies and their shareholders since most newswire services bill their clients based on the number of words in their releases. The substantial savings from this model would give companies greater flexibility to invest in new technologies such as XBRL.
If you can think of reasons for or against this “notice-and-access” concept for material news releases, we’d love to hear them. Please use the commenting form below.
See a demo release using this model.
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