Trump takes aim at quarterly reports

President Donald Trump

Regulators can conduct studies of their own volition, or will do so at the request of Congress, the president, or the public.

He suggested that a switch to only half-yearly reporting would save companies money, echoing the wishes of several top chief executives.

U.S. President Donald Trump has asked the U.S. Securities and Exchange Commission (SEC) to study the feasibility of ending quarterly reporting for U.S. businesses to ease regulations and spur greater economic growth.

Under current rules, listed companies in the USA must report financial results every three months, but in many other countries around the world, businesses are only mandated to do so twice per year, a model many United States businesspeople wish to adopt.

Under federal law publicly traded companies must file a 10-Q report with the SEC every three months.

While Trump nominated SEC Chairman Jay Clayton as the agency's head, as well as two of its three commissioners (one additional Trump nominee is pending before the U.S. Senate), he does not oversee its work. "I have asked the SEC to study!"

Trump's proposal, released via Twitter, would do away with the decades-old tradition of obligating companies to file quarterly reports and move to a semi-annual system.

Trump said the issue was brought to his attention recently by Indra Nooyi, the chief executive officer of PepsiCo Inc.

Trump said he got the idea after speaking with "some of the world's top business leaders".

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"We are looking at that very, very seriously".

The UK, for example, does not require companies to report earnings every quarter, though more than 90% of listed firms still do, according to MarketWatch. "Many investors and market participants share this perspective on the importance of long-term investing".

"My comments were made in that broader context, and included a suggestion to explore the harmonisation of the European system and the U.S. system of financial reporting".

And he said, the SEC already had implemented some regulatory changes and continued to consider others that "encourage long-term capital formation while preserving and, in many instances, enhancing key investor protections".

"It is not the fact that you report quarterly that is the problem; it's a bad management team", he said. One provision of the bill includes a requirement that the SEC review the quarterly reporting requirement.

"I'd like to see twice but we're going to see", Trump said. Nooyi said she thinks it would be beneficial to harmonize American and European rules on financial reporting.

The SEC enjoys some level of distance from the White House because it's an independent agency. Well-known chief executives, including JPMorgan Chase & Co's Jamie Dimon, Berkshire Hathaway Inc's Warren Buffett and BlackRock Inc's Larry Fink have raised concerns about the focus placed on earnings reports and guidance. "Investors need timely, accurate financial information to make informed investment decisions".

Scrapping the quarterly requirement "is a solution in search of a problem", said Charles Elson, a professor and director of the University of Delaware's Weinberg Center for Corporate Governance.

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