Publicly traded companies are businesses that have their shares listed on regulated stock exchanges, such as the New York Stock Exchange and the NASDAQ stock market. A public company is governed by securities laws and disclosure requirements. In the United States, the principal regulatory agency is the U.S. Securities and Exchange Commission, or SEC. The basic governing law is the Securities Act of 1933 that has two objectives: require the disclosure of financial information and prohibit fraud.
Types
Financial information consists of regulatory filings, news releases and investor conference transcripts from companies, and opinion and analyses from analysts and other external sources. Regulatory filings include quarterly and annual financial statements -- income statement, balance sheet and cash flow statement -- and materially significant financial news. SEC's Regulation FD (Fair Disclosure) promotes full and fair disclosure by prohibiting publicly traded companies from making selective disclosure of material information to certain market participants, such as analysts and investment banks. Information from external sources include financial media news coverage, financial blogs and the buy-sell-hold recommendations of stock analysts working at research companies and investment banks.
Sources
Sources for financial information can be filtered or unfiltered. Filtered sources add context and opinion to unfiltered company information. Unfiltered information is found on the investor relations websites of publicly traded companies -- see Resources for two examples -- and in the SEC's EDGAR database, which provides free public access to corporate information. Filtered information is found in the financial press, such as the "Wall Street Journal" and CNBC; on online financial portals such as Google Finance and Yahoo! Finance; and from information providers, such as Bloomberg, Thomson Reuters and FactSet, that collect and distribute research reports, industry data and other financial information to subscribers.
Analysis
Investment banks, mutual fund companies and other market players employ professional research analysts who pore through company financial statements and industry data, ask questions of company management at investor conferences and on quarterly earnings release webcasts, talk to their sources to find out the state of play in the supply chain, and cross-reference information from other companies in the industry to produce usually comprehensive reports on public companies. Most of these reports are available only to clients or subscribers, although the headline buy-sell recommendations are often covered in the financial press. Individual investors may not have the same kind of access to proprietary databases as analysts do, but they can read financial reports, listen to archived webcasts on company investor relations websites, and use their judgment to come to investment decisions.
Consideration
Judgment also protects against the inevitable get-rich-quick fraudulent schemes that are now a part of the financial information available online. The SEC, on its own website and on the Investor.gov website, provides useful information for investors to detect and deal with fraud. The way to protect against deceptive practices is to analyze the data direct from the publicly traded company, verify claims about new products or lucrative contracts, check the management background and ask questions.
Tags: traded companies, external sources, financial information, financial information, financial press