Donald Trump says asking SEC to consider ending quarterly earnings reports

by Frankie Norman August 20, 2018, 21:12
Donald Trump says asking SEC to consider ending quarterly earnings reports

Putting together quarterly reports is also a huge cost for public companies, requiring resources to be directed at reporting rather than producing goods and services for the market.

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

Trump has asked the Securities and Exchange Commission to study the impact of such a change.

Abolishing the rule would "allow greater flexibility & save money" for businesses, Mr. Trump tweeted.

Kevin Lamarque/ReutersU.S. President Donald Trump hosts a meeting with business leaders in the Roosevelt Room of the White House in Washington January 23, 2017.

While some business leaders have groaned about the rigours associated with having to disclose financial figures four times a year, the SEC has been reticent to make any changes.

According to Mr Trump, top business leaders from around the world claimed that removing the administrative burden of such regular reporting would boost the USA economy and create jobs. "Stop quarterly reporting & go to a six month system", said one.

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".

But critics contend that new reporting requirements may not spur meaningful change given the deluge of company information available on social media. I asked, what could we do to make it better?

President Donald Trump on Friday tweeted that the United States could abandon quarterly financial reporting.

"We are looking at that very, very seriously". But quarterly reports on results are distinct from the so-called earnings guidance that company executives provide as a forecast. One of the reasons Tesla CEO Elon Musk wants to take his company private, he told his employees last week, was the way quarterly reports distort decisions at the company.

Following Clayton's statement, the agency also announced it had voted to adopt a rule change first proposed in 2016 to streamline some company accounting disclosures, in an unscheduled private commission vote.

SEC Chairman Jay Clayton, a Trump nominee, has said increasing the number of public companies and initial public offerings are among his top priorities. A lot can change in a three-to six-month period, especially with all the disruption in technology.

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.

Half-yearly reporting would mark a huge change in USA disclosure requirements and put them in line with European Union and United Kingdom rules. "Investors need timely, accurate financial information to make informed investment decisions".

"It is not the fact that you report quarterly that is the problem; it's a bad management team", he said.


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