Trump asks SEC to study ending quarterly earnings for public companies

Roman Schwartz
August 19, 2018

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

In a tweet early today, Trump said that after speaking with several top business leaders, he's asking the Securities and Exchange Commission to determine whether shifting to a six-month reporting requirement would help companies grow faster and create more jobs.

In a statement Friday, Nooyi said her comments were part of a broader conversation about how to better focus companies toward long-term goals. In addition to financial information about earnings and cash flow, these reports also include qualitative information in the form of earnings guidance, which are 'forward-looking' statements from management about what the company plans to do in the future.

SEC chairman Jay Clayton issued a statement saying the agency "continues to study public company reporting requirements, including the frequency of reporting".

Switching to a six-monthly reporting system would "allow greater flexibility and save money", Mr Trump said.

"My comments were made in that broader context, and included a suggestion to explore the harmonization of the European system and the USA system of financial reporting. In the end, all companies have to balance short-term and long-term performance", Nooyi said. As an independent agency, the SEC enjoys some level of independence from the White House. While some business leaders have groaned about the rigors associated with having to meet targets and metrics four times a year, the SEC has been reticent to make any changes.

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The SEC consists of five commissioners appointed by the president, although there now are only four in place, three named by Trump.

Trump recently hosted company leaders at his private golf club in Bedminster, New Jersey, including the heads of Apple Inc, Fiat Chrysler Automobiles NV, Boeing Co, FedEx Corp, and Honeywell International Inc.

The Trump administration has said it would like to reduce red tape it blames for a decline in public listings.

The SEC has been reluctant to make changes in quarterly reporting, which has always been a cornerstone of United States capital markets. But moving away from reporting earnings every three months would be a much more dramatic change that would nearly certainly trigger resistance from shareholders who want transparency from the companies they invest in.

Companies that want to distance themselves from short-term scrutiny should instead stop publicly projecting the next quarter's earnings, Pozen added. That was the argument made by Jamie Dimon, the chief executive of JPMorgan Chase, and investor Warren E. Buffett in a widely shared op-ed published by the Wall Street Journal in June. "Investors need timely, accurate financial information to make informed investment decisions".

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