Trump wants study on quarterly reports
President says six-month system might be better
President Donald Trump has asked Wall Street’s top regulator to look into whether U.S. companies should report their financial results less often, a move that could upend long-standing rules and which critics claim could leave investors with too little information about the stocks they own.
Instead of publicly traded companies disclosing how they’ve done every quarter, which are three-month stretches, the president tweeted Friday that he wants the Securities and Exchange Commission to study whether companies should instead share their results every six months.
In his tweet, Trump said that in speaking with business leaders, he asked what would improve business and jobs, and one told him, “Stop quarterly reporting & go to a six month system.” Trump later said it was outgoing PepsiCo CEO Indra Nooyi, a member of the Business Roundtable, who called for an end to quarterly reporting in favor of reports every six months.
As a result, the president said he has “asked the SEC to study” the request of having companies report their profits, losses, sales and other data twice a year.
The main arguments for reducing the frequency of corporate reporting is that it will reduce the costly, time-consuming practice of gathering and distributing the data and allow company managers to focus more of their attention on executing their long-term business plans and objectives.
Trump’s move follows a recommendation in June from high-powered CEOs Jamie Dimon of JPMorgan Chase and Warren Buffett of Berkshire Hathaway for companies to move away from quarterly earnings “guidance.”
But Dimon and Buffett both stressed that their call to do away with corporate “guidance” updates “should not be misconstrued as opposition to quarterly and annual reporting.”
Critics of Trump’s push for less frequent corporate reporting say quarterly reports are still the way to go, stressing the more frequently investors get updates via regulatory filings from the companies they invest in, the better.
In a statement, SEC Chairman Jay Clayton said the regulator has implemented and continues to consider other regulatory changes that encourage long-term capital formation while preserving and enhancing key investor protections.
In a statement after Trump’s tweet, Nooyi said many market participants and the Business Roundtable “agree that a short-term only view can inhibit long-term strategy,” adding that her “comments were made in that broader context, and included a suggestion to explore the harmonization of the European system and the U.S. system of financial reporting.”
In Europe, companies are required to report some financial information only two times a year.
President Donald Trump’s move follows a recommendation in June from high-powered CEOs Jamie Dimon of JPMorgan Chase and Warren Buffett of Berkshire Hathaway for companies to move away from quarterly earnings “guidance.”