Below is a chart of total EDGAR filings in June. Filings are off 15% year over year and off 24% from the high in 2006. In a way, Filings = Business Activity + Regulations. We have not seen a decline in regulations. The increase around 2003 was due to the Section 16 regs which required electronic filings of beneficial ownership transactions.
Below is a graph that shows the total number of distinct entities filing a 10-K or 10-Q over time. It also shows the number of distinct entities expressing "substantial doubt" for the first time in one of those filings (full details on the data below the jump).
Although substantial doubt could occur anywhere in the filing (because my program searches the entire document) the samples I've eyeballed show it in the Going Concern section of the Basis of Presentation Note (this will get easier as XBRL rolls out). Anyway, it's not what most companies want to say anywhere in a report.
As you can see the number of companies saying they have substantial doubt for the first time has been increasing for a while with the last big jump starting late in '07. Without an influx of IPOs this suggests that the current down trend in the number of reporting companies will continue. Companies may go on for quite a while saying they have substantial doubt. Next up will be the cumulative numbers.
The counts use distinct CIKs that filed a 10-K or 10-Q form type during the period. 10-K form types include 10-K, 10KSB, 10-K405. 10-Q form types inlude 10-Q and 10QSB. Entities using the asset backed SIC code are excluded. Period dates are adjusted to handle the extended filing deadlines for 10-Ks. Period 1 for the K is February thru April. Period 2 is May thru July etc. Periods for the Qs are calendar year quarters. A four period moving average is used to smooth out results since the bulk of initial substantial doubt language tends to happen in period 1 with the audited 10-K.
Below is a chart of the percentage of distinct 10-Q filers who have expressed "substantial doubt" in their filing. Time period is the second quarter of each year (not much will happen 10-Q-wise in the next couple weeks).
Although substantial doubt could occur anywhere in the filing (because my program searches the entire document) the samples I've eyeballed show it in the Going Concern section of the Basis of Presentation Note (this will get easier as XBRL rolls out). Anyway, it's not what most companies want to say anywhere in a report.
As you can see the percentage is rising. The number of firms expressing substantial doubt is growing even as the number of filers is declining. Looking closely at the 2006 group about half did not file a Q so far this year.
With no IPO market it looks like the public regulated capital markets will continue to shrink. What that means, if anything, I'll leave to better minds.
This is one of those forms where a lot of activity can be good or bad depending on your point of view. For instance, when there is a lot of merger and acquisition activity these get filed. Right now, there's not a lot of merger and acquisition activity. Some of these firms will continue in business perhaps trading over the counter until they can meet an exchange's listing requirements again. For others it's a first step to de-registration, sometimes as a privatization but often they just disappear.
The number of 10-Q filers this past May did some cliff diving. I'll put up a chart with quarterly numbers after the month is out which will give a better picture, but it won't change the trend. The drop off is similar to what happened after the dot com bubble.
This graph shows a count of the number of distinct entities filing a Form 10-Q, a company's quarterly report, for May in each year. 10QSB filings are included in the years when it was still filed. May is when most companies will file their first quarterly report for the year. The CIK (central index key) is used to find unique entities. Co-registrants are included.
Recent Comments