Trump Calls On SEC to Study Ending Quarterly Reporting

Aug 20, 2018, 21:13
Trump Calls On SEC to Study Ending Quarterly Reporting

While it's hard to determine what will come of Trump's tweet and charge to the SEC, if such a change were to occur, Wedbush Securities analyst Christopher Svezia said there could be positives for both investors and companies.

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

US President Donald Trump has asked stock market regulators to look into ending the requirement for businesses to issue quarterly earnings reports.

Half-yearly reporting would mark a huge change in US disclosure requirements and put them in line with European Union and United Kingdom rules.

Speaking to the New York Review of Books in 2015, Obama said that he had talked to a large number of businesses executives who told him, "Because they've got quarterly reports to shareholders and if they've made a long-term investment that may pay off way down the line, or if they're paying their employees more now because they think it's going to help them retain high-quality employees, a lot of times they feel like they're going to get punished in the stock market".

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There will now be an investigation into the impact of this policy idea by the Securities and Exchange Commission (SEC), the president added.

The SEC's chairman said the agency already is studying the issue.

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.

Others said quarterly disclosures are essential for investment decisions and support richer USA stock valuations, and that a change could make shares more volatile. Even SEC Chairman Jay Clayton, a Trump appointee who has made boosting the number of initial public offerings one of his top priorities, hasn't floated the idea of scaling back reporting requirements. "So we're looking at that very, very seriously", Trump said as he was boarding Marine One on the White House lawn Friday morning.

Nooyi said in an e-mailed statement, "Many market participants, as well as the Business Roundtable which we are a part of, have been discussing how to better orient corporations to have a more long-term view".

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The SEC has been reluctant to make any changes in quarterly financial reporting, which has always been a cornerstone of US capital markets. The report compares company earnings with that of the previous quarter.

"Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace", said Amy Borrus, CII's deputy director.

Quarterly reports are "early warning signs of other bigger problems", Elson said.

The SEC enjoys some level of distance from the White House because it's an independent agency.

In a joint letter published in The Wall Street Journal in June, JPMorgan CEO Jamie Dimon and the Berkshire Hathaway boss Warren Buffett argued against the practice of quarterly financial forecasting, saying it led to "short-termism" within companies.

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