EDGAR stands for Electronic Data Gathering, Analysis, and Retrieval and is a searchable database of filing documents for U.S. companies. The Securities and Exchange Commission (SEC) requires public companies to file certain documents by law and EDGAR is the centralized database where they are all stored and accessible by the general public.
EDGAR’s primary aim is to increase the efficiency and fairness of the securities market by accelerating the receipt, acceptance, dissemination, and analysis of time-sensitive corporate information filed with the SEC. A secondary aim of EDGAR is to provide transparency in the marketplace by making company filings quickly available to investors over the Internet.
Some fillings must be submitted electronically through the EDGAR website. The filings will not be accepted manually unless they satisfy the requirements for exemption. Other filings may be submitted on EDGAR or manually.
Accessing EDGAR Data
The following information is provided for each filing: Company Name, Form Type, CIK (Central Index Key), Date Filed, and File Name.
Central Index Key (CIK)
The CIK is a unique number assigned by the EDGAR system to filers when they sign up to make filings to the SEC. Each filer is given a different CIK number, and it is not recycled.
Let’s assume “00011-18-118890” is the accession number. It is a number assigned to a submission by the EDGAR System. The first set of numbers (00011) is the CIK. The next two numbers (18) represent the year. The last series of numbers represent the count of filings from that particular CIK. The count is usually reset to 0 at the beginning of each calendar year.
SC 13G (Statement of acquisition of beneficial ownership by individuals)
S-8 (Securities to be offered to employees in employee benefit plans)
S-1 (Initial registration for new securities to be offered, prospectus)
Why Do Financial Analysts Use EDGAR?
Financial analysts use the Electronic Data Gathering, Analysis, and Retrieval system because it’s a centralized place to get all the company documents they require for financial modeling, valuation, and other analyses.
The alternative for an analyst is to visit each company’s individual investor relations website and find the information they need there, but companies typically don’t file nearly as much information on their IR site as they do on the SEC database.
While there are many alternative sources of information, such as Bloomberg or Capital IQ, those types of data providers are considered indirect sources of information. A financial analyst working in investment banking on a live transaction would have to gather information directly from the source (the SEC) to ensure that there is no risk of errors from third-party sources.
As analysts use such information for different forms of evaluation, comparisons become extremely important. One of the limitations of the EDGAR database system is that one cannot compare disclosures within specific listings, even if the filings were made by the same company.
Moreover, the system does not provide the number of publicly traded companies or the total number of issuers in a particular market. There are limits on the number of results returned for each query.
Another drawback of the EDGAR system is that the filings are difficult to read compared to the annual reports. Even though all the information is contained in the filings, details can be difficult to find in one huge file. However, the information is always presented in the same way regardless of which company filed the information as all companies must follow the regulations set by the SEC while filing information.
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