When publicly traded companies approach their filing deadlines with the United States Securities and Exchange Commission, they need to include all the correct information necessary for a fault-free filing. Many businesses look at their competitors to get insight into the ways that disclosures should be completed, but they can also look at their own historical filings.
Simply put, historical filing analysis is the collection and evaluation of past filings to complete the picture of the organization’s financial health. Companies bring up the most recent filings of the same type and inspect them for accuracy, consistency, and strategy. A historical data-driven analysis can improve future decision-making, strengthen compliance and increase the quality of investor communication. With the addition of technology, AI in particular, companies can complete this task more quickly with a higher degree of reliability and quality of insights.
What Is Historical Filing Analysis?
Historical filing analysis usually involves an examination of various SEC filings, such as a 10-K, 10-Q, 8-K, or proxy statement. Companies may dig deeper into different types of financial statements, such as an income statement, to complete a quantitative analysis of performance. This analysis might include revenue, cash flow, expenses, liabilities, assets and overall profitability. Some organizations perform a manual review, but an AI-driven, automated analysis provides greater precision and the ability to complete these assessments at scale.
Although stronger compliance is a chief benefit, it is not the only one. Many companies use this analysis to:
- Identify trends within filings
- Refine strategies based on findings
- Improve processes
- Ensure consistency between disclosures
Consistency is a practical necessity for these filings since investors use them when evaluating company financial health.
Historical financial analysis often focuses on quantitative assessments like financial performance data, but the narrative elements are also important. For example, in a Management Discussion and Analysis section common to many filings, companies have space to discuss their financial condition and goals in a narrative format. Qualitative analysis can compare language, tone or depth to assess past performance and determine how to adjust for future filings.
The Business Value of Historical Filing Analysis
Performing a routine analysis of past SEC filings offers benefits for finance, legal and investor relations teams. These advantages include:
- Ensuring accuracy and consistency: Regular evaluation identifies errors for prompt correction before filing, highlighting processes that need improvement. Consistent review decreases the likelihood of discrepancies that could trigger SEC or investor scrutiny.
- Supporting regulatory compliance: Compliance involves a regular assessment of filings and processes to confirm that they follow generally accepted accounting principles and meet changing requirements. Internal auditing of historical financial statements makes it easier to verify accuracy and consistency before filing.
- Enhancing strategic decision-making: When combined with an analysis of company or stock performance at the time of the filing, companies can associate updates to filing processes that led to improvement in investor confidence, rise in stock price or other positive indicators. These aspects can be integrated into future filings for precise competitive positioning over time.
Streamlining the filing process to use precise language and best practices can help companies to get an accurate sense of the performance of these efforts.
Common Use Cases for Historical Filing Analysis
Although companies can do a historical filing analysis at any time, there are a few scenarios in which it makes more sense. These include:
- Pre-filing review: Legal and financial departments look at past disclosures to confirm that the current language, content and data visualizations are in line with previous filings, in advance of their deadline on the SEC filing calendar.
- Post-filing evaluation: Analysts compare past filings to other company performance data to highlight reactions by investors, driving strategic planning by executives.
- Benchmarking and competitor analysis: Organizations combine the analysis with peer benchmarking to update best practices for the company type and industry.
- ESG narrative consistency: Companies record changes in sustainability messaging to reflect trends and updates to the popular lexicon.
- Audit preparation: Analysts compare past filings to build a trail toward greater internal controls and audit readiness.
Businesses may choose to review once a year or simply perform the analysis when a situation prompts it.
Turning Insights Into Action
Historical filing analysis can be the step that triggers years’ worth of insight and effective action. To get the most from the analysis, consider these best practices:
- Document findings and integrate insights into future templates and adjustments to standard operating procedures.
- Collaborate with finance, legal and investor relations teams to refine the disclosures in ways that benefit all parties.
- Create a library of disclosures that can build on itself for continued insights, even as the company evolves and regulatory requirements change.
Effective use of these insights can translate into stronger company storytelling and investor engagement, which are important elements of business growth over time. For most, that requires the use of SEC filing software, such as DFIN ActiveDisclosure. To learn more about how DFIN can help you prepare future-ready financial reporting, contact us to request a demo today.
