President Trump asks SEC to study abolishing quarterly earnings reports

  • President Trump asks SEC to study abolishing quarterly earnings reports

President Trump asks SEC to study abolishing quarterly earnings reports

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

The president on Friday said he has asked federal regulators to study whether public companies should be required to report results half as often as they now do - every six months instead of every three months, or once a quarter.

Trump said he directed the SEC to look into a change in its requirements.

Trump said on Twitter that meetings with business leaders had convinced him that the change would give companies more flexibility and reduce costs.

Trump said the idea came from conversations with the "world's top executives", including PepsiCo's outgoing chief executive, Indra Nooyi.

The SEC is an independent agency, and the president can not force it to implement rule changes.

The news came via a tweet this morning from the president, who said he received insight from "some of the world's top business leaders", one of whom suggested that if the SEC were to "stop quarterly reporting [and] go to a six month system", it would boost USA business growth and employment.

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

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

Tesla Inc Chief Executive Elon Musk stunned investors last week by announcing a plan to take the electric carmaker private, a move he says would benefit shareholders by removing short-term pressures associated with being a public company. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year".

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.

"I'd like to see twice (a year), but we're going to see", Trump said.

There are also tremendous expenses tied to preparing quarterly and annual reports.

A top criticism is that companies are less likely to invest in their businesses if they are pressed to show profit gains every quarter.

The Council of Institutional Investors (CII) believes that public companies should continue to report quarterly on their financial performance. I find it very rich that he's proposing this with some veil that it's going to help companies think long-term.

In a report published by the US Treasury a year ago, the administration outlined policies it hoped would revitalize listings - but did not go as far as suggesting quarterly reporting requirements be scrapped. A lot can change in a three-to six-month period, especially with all the disruption in technology.

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". Two influential figures, JPMorgan Chase CEO Jamie Dimon and billionaire investor Warren Buffett, recently urged together that public companies either reduce or eliminate quarterly earnings guidance.