Taking the Spin Out of Earnings Announcements

    by CFA Institute

    Public companies always want to put the best face on their quarterly financial results—that’s just human nature.

    But it doesn’t mean an investor needs to be distracted by excessive ‘spin’ or downplaying of less favorable information that may in fact be critical to seeing the complete picture.

    While the SEC filings (called 10-Qs for quarterly reports and 10-Ks for annual financial filings) are mandatory and there are specific rules about what must be reported in them, news releases are not mandated by law. In fact, companies have a great deal more flexibility about what they disclose in their earnings press releases. For this reason, investors should be cautious of earnings news releases that typically precede the financial reports filed with the Securities and Exchange Commission.

    ...To continue reading this article you must be registered with AAII.

    Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
    JOIN TODAY for just $29.
    Register for FREE
    to read this article and receive access to future AAII.com articles.

    Log in
    Already registered with AAII? Login to read the rest of this article.
    → CFA Institute