By Paul Kiernan, Mark Maurer and Dave Michaels 

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (March 28, 2020).

WASHINGTON -- Public companies will have extra time to file annual reports and other major disclosures, as firms ranging from McDonald's Corp. to Hershey Co. brace for a financial hit from the new coronavirus.

The Securities and Exchange Commission has given companies an additional 45 days to file the periodic reports that investors depend on to learn about financial performance and developing risks. The relief applies to filings that companies would normally make between March 1 and July 1.

The situation isn't ideal for investors. Delays in financial reporting deprive them of the information they need to assess future performance, promoting higher capital costs, lower stock prices and more volatility.

"A delay always raises a question: What are they not telling us, and why?" said Paul Miller, a professor emeritus of accounting at the University of Colorado at Colorado Springs. "The market's aggregate will respond with uncertainty by depressing share prices."

The SEC's measures reflect a growing recognition among policy makers and investors that it could take months to determine the economic impact of the pandemic and of efforts to contain it.

Surveys this week showed record declines in U.S. and European business activity in March, and some data suggest that many smaller companies -- particularly restaurants and retailers -- would struggle to survive a shutdown lasting longer than a few weeks.

"As we cannot predict the duration or scope of the Covid-19 pandemic, the negative financial impact to our results cannot be reasonably estimated, but could be material," McDonald's said in a filing Wednesday.

With a growing number of businesses shuttered to contain the virus, it may be impossible for many companies to assess accurately the value of inventory, goodwill, accounts receivable or securities held.

"If all of a sudden most of your primary customers are looking at potential bankruptcy, you've got to make massive write-downs in your accounts receivable," said J.W. Verret, a law professor at George Mason University. "Accountants are facing an impossible task right now."

For companies such as the health-care logistics firm Owens & Minor Inc., the task of preparing financial statements for the latest quarter has so far taken a back seat to the finance team's analysis of business divisions affected by the pandemic.

"We've probably been more focused on customer-facing decisions at this point, and not as focused on our Q1 reporting of the numbers," Chief Financial Officer Andy Long said in an interview. "It's something that, quite frankly, we're going to spend a little bit more time on going forward."

The latest round of SEC relief is similar to what regulators provided companies in areas affected by Hurricane Katrina in 2005 and superstorm Sandy in 2012, though much broader in geographic scope.

The SEC doesn't give companies free rein to withhold material information, however.

The agency issued guidance this week on how companies should update investors on business disruptions from the coronavirus, including whether work-from-home requirements might hurt their operations and accounting systems.

Some decisions may be trickier than usual, such as whether to book an impairment on assets that are less valuable owing to economic shock. Still, that information should be given to shareholders as quickly as possible, the SEC said.

"The commission is not going to second-guess business people who make disclosures in good faith, but they also make clear that if you knowingly or recklessly make misstatements, that will trigger enforcement," said Dick Walker, a partner at King & Spalding LLP and a former SEC enforcement director.

Regulators have also noted the heightened chance of insider trading in the age of the coronavirus. Managers may have inside information about risks or business impacts stemming from the pandemic and should refrain from trading, the SEC's enforcement division said this week.

The SEC extended similar relief to some filings required of investment advisers and mutual funds if their operations have been affected by the pandemic.

Write to Paul Kiernan at, Mark Maurer at and Dave Michaels at


(END) Dow Jones Newswires

March 28, 2020 02:47 ET (06:47 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
Hershey (NYSE:HSY)
Historical Stock Chart
From Apr 2020 to May 2020 Click Here for more Hershey Charts.
Hershey (NYSE:HSY)
Historical Stock Chart
From May 2019 to May 2020 Click Here for more Hershey Charts.