The quarterly profit and supervision curse: chasing the profit in the short term quietly sabotages the future of India

The curse of quarterly income has surfaced again with a function of Donald Trump, the president of the United States, about the truth of the truth, which strongly argues for scrapping.

In the Grand Theater or Indian Business there is no more ritual holy – or more misleading – than the quarterly report.

Every three months it becomes a high-stakes company spectacle, a national Tamasha where armies of analysts every decimal point, and CEOs hold his breath to explain deviations in income.

The entire exercise is framed as a characteristic of a healthy, transparent market. According to the offers and disclosure requirements of Sebi (LODR), Indian companies are locked up in this rigid system, requires to submit quarterly financial results within 45 days after the end of a quarter.

But powerful voices of legendary investor Warren Buffett and Jamie Dimon to former Sebi chairman M. Damodaran Hebben for a long time claimed that this ritual is not a sign of health, but a slowly working poison pill.

They claim that the non-repellent pressure to achieve goals in the short term forces companies to sacrifice their vitality in the long term. Here is the central paradox of short term: the pressure that national innovation strangles can actually benefit the Bottom Line of an individual company. Groundbreaking Research Research by Stephen Terry Van Boston University reveals a counter-intuitive finding: The pressure to affect Kortaaldo beers Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines Disciplines. can be different for a small day door. R&D Laboratories. But when every company takes on this short -sighted discipline, the cumulative effect creates a huge negative externality for the entire economy.

When thousands of companies are crashing their R&D budgets to make the figures of the next quarter look good, they cut off the most important source of future growth in the country.

It is a classic “tragedy of the commons” for innovation, where individual rational decisions lead to a collective disastrous outcome.

Moreover, worldwide research offers concrete evidence of the substantial costs imposed by quarterly reports. Analysis of SEC archives shows that out-of-pocket cash costs for quarterly reporting $ 100,000 per period can reach for large companies, including reimbursements to lawyers, auditors, tax experts and IR/PR consultants.

The load influences disproportionately smaller companies. Data from the audit analysis shows that smaller companies pay $ 3,345 per $ 1 million in audit costs, compared to only $ 541 per $ 1 million for large accelerated files-a six-time difference, which 0.33% respectively represents versus 0.05% of the turnover.

In addition to monetary costs, management time is a considerable alternative costs. Research indicates that CEOs spend about 2% of their time and CFOs around 5%, to quarterly applications.

Long before this global trend became strength, one of the most respected supervisors of India already sounded an alarm. M. Damodaran, former Sebi chairman, was a foresighting voice in which a fundamental reconsideration of this obsession with short-term statistics was called.

In an interview in 2018, he remembered his earlier warnings and noticed that the ideas that were defended by Warren Buffett were that he had argued years earlier. “This is not something new, except for the fact that it comes from Warren Buffett – that’s why everyone sits up and takes knowledge.”

Indian CEOs such as Uday Kotak (Kotak Mahindra Bank), Rohit Jawa, Hul, Vishal Sikka (Infosys) and N. Chandrasekaran (when he was CEO of TCS) also expressed concern about the unnecessary pressure of the quarterly profit for the company.

Conclusion: India at a crossroads

The evidence is overwhelming. The quarterly reporting system, originally intended to promote transparency, changes into a value -not -noting machine.

It stimulates a culture of short -term Gamesmanship, forcing managers to sacrifice long -term innovation and national prosperity for the volatile reward for meeting a quarterly number.

The European Union played ten years ago, Japan followed in 2024 and Singapore moved to a risk -based approach. The result? Not chaos.

When the UK removed the mandate, a crucial fact arose: fewer than 10% of the companies actually stopped issuing quarterly reports.

The system has become an institutional imperative, dressed under the guise of high standards of corporate governance. In the meantime, the rise of China is entering the global innovation card – with limited disclosure of investors – with American companies, where the amazing costs of inactivity are enormous.

Nowadays, the constant compliance with India to the old model is a conscious and increasingly risky choice. The current system benefits primarily to traders and analysts in the short term, not the long -term investors who are the actual foundation of the capital markets of a country.

The high job in investment funds bears witness to the short-term character of the investment world, while government initiatives such as production-linked incentives emphasize how Corporate R&D has been robbed for many years.

Days are not far when the quarterly profit pressure is called the ‘innovation note’. As the world moves on hyper -competitive speed, it is time for Corporate India and supervisors to find the courage to end the tyranny of quarterly win syndrome.

(The author is the founder of Vallum Capital Advisors, a portfolio control company that manages stock investments)

(Disclaimer: recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)