Reporting financial information on the Internet and social media
As you may know, public companies publish a lot of financial information. As accountants, the first of such information that comes to mind is the annual report and accounts – which is a legal requirement. Other such information includes regular notifications and reports to stock exchanges. Normally, the format, content and timing of any financial information releases by public companies is well-regulated and usually a mass communications medium is used. Of course, like all other aspects of business life the pace of technological change – in particular the use of Internet and social media – is causing some issues for the reporting of financial and similar information by companies.
Take for example the recent Netflix issue. In July 2012, the CEO of Netflix commented on Facebook
“Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.”
The Facebook page had close on 250,000 followers at that time. The result of this post was an approximate 30% increase in stock price the following day. Later in July, a quarterly earnings release showed a substantial fall in revenues and the stock price fell. The US Securities and Exchange Commission (SEC) were not overly impressed with the initial release via Facebook, arguing that the information was material and should have been disclosed by means of a regulatory filing or press release. So, in essence, the argument of the SEC is that Facebook (or other social media) are not necessarily the correct communications medium. The counter argument would of course be that social media may actually be a communication medium with a much broader spread.
Perhaps what this example shows is the need for a policy for how and when to use the internet/social media as a means to reporting key financial and business information using social media?