Risk & Compliance

Disclosure: Best to Beat the Clock

When it comes to reporting earnings, first movers may have an advantage.
Tim ReasonSeptember 25, 2001

Battles are won, goes the Civil War-era maxim, by he who “gets there first with the most.” The same applies to investor relations, says Mike Coke, CFO of AMB Property Corp.

In 1999 the San Francisco-based real estate investment trust (REIT) reported its results a full month after the close of the first quarter. “Fifty other companies reported earnings that week,” notes Coke, including most of his competitors. “I wanted AMB to become the benchmark for the industry.” So he pushed the company to report earnings earlier. Much earlier.

Coke dubbed his goal “GE minus one,” and tied employee bonuses and vendor incentives to AMB’s ability to beat General Electric Co.’s early reporting date by a day. AMB hit that goal in the second quarter of 2000, and this year it has twice reported on the second Monday of the quarter, beating GE by three days.

The result? AMB gets a lot more attention, says Coke. Seventeen analysts cover the company, an increase from 9 in 1999. In addition, the number of analysts and investors listening in on earnings calls has more than tripled, to 140. “It’s all the big analysts and investors,” says Coke. “And the quality of coverage is a lot broader now.”

“It helps me not to have three other calls to cover the same day,” agrees institutional investment analyst Jim Sullivan of Green Street Advisors, in Newport Beach, California. “The most impressive part is that AMB has shown that its reporting systems are superior to those of the other real estate companies that we follow.” But, he adds, “it also sets AMB up as sort of a lightning rod, especially if there is negative news.”

That’s OK with Coke. “It has probably led to some overanalysis,” he concedes, “but I prefer that to no analysis. The worst thing that can happen is to be unimportant.”

Another benefit, he says, is that “backroom accounting people now feel that they are part of the success of the business.” Releasing numbers in the elite company of GE and others, Coke explains, “gives them something to be proud of.”

That’s true even when there’s bad news, as there was last quarter. Like many REITs, AMB invested overenthusiastically in the tech sector. Once again, though, the company was first with the most, aggressively writing down its investments to zero, a move other REITs were forced to follow. “AMB set the tone,” says Sullivan. “It put the onus on other companies to come clean as well.”