Trump ignites debate on earnings reports

Trump calls for study on ending to quarterly earnings reports

In a Friday statement, White House spokeswoman Lindsay Walters said Trump is interested in "examining this issue on whether short-term earnings reporting requirements for public companies reduce incentives for them to engage in long-term investing in the United States".

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

Listed companies in the U.S. must report financial results every three months, but in many other countries businesses are mandated to do so only twice a year.

One reason for a possible change is that reporting every three months means that companies sometimes lose long-term focus because their efforts are spent on showing short-term profits each quarter. "I have asked the SEC to study!".

Still, Van Sinderen cautions, six months can be a long time for smaller companies - particularly those shouldering hard challenges - and can lead to other issues should those two reports differ drastically.

Trump believes he has the support of some executives for a change.

Trump said the idea came from conversations with the "world's top executives", including PepsiCo's outgoing chief executive, Indra Nooyi. "So we're looking at that very, very seriously".

"If public companies moved from quarterly to semi-annual reporting, that would deprive investors of timely information and dramatically increase the potential for insider trading", said Robert Pozen, Senior Lecturer at the MIT Sloan School of Management, who has studied the issue. "We start preparing three weeks in advance every quarter, essentially taking nearly a third of executives' time each quarter", said Bryan Sheffield, chief executive of shale oil producer Parsley Energy Inc.

Trump's proposal, offered in a 7:30 a.m. tweet, took the securities industry by surprise and prompted some to worry that it could unintentionally lead to more market volatility and corporate mischief. One provision of the bill includes a requirement that the SEC review the quarterly reporting requirement. "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 harmonization of the European system and the USA system of financial reporting".

The SEC enjoys some level of distance from the White House because it's an independent agency. Still, Clayton hasn't floated reducing the number of times that companies must disclose their financial performance each year.

President Trump called on financial regulators Friday to consider allowing public companies to share information with investors less often, a potentially major shake-up of how corporate America operates. Some high-profile executives, including JPMorgan Chase chief executive Jamie Dimon, have recommended that companies stop providing Wall Street analysts guidance on what to expect from quarterly profits, for example.

In theory, this information helps investors make informed decisions about the future success of a company.

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