Published: Sun, August 19, 2018
Business | By Pearl Harrison

Trump Calls On SEC to Study Ending Quarterly Reporting

Trump Calls On SEC to Study Ending Quarterly Reporting

"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.

President Donald Trump on Friday called on the U.S. Securities and Exchange Commission to study ending quarterly reporting requirements for public companies and switch to a six-month system in order to cut costs and spur growth, a major policy shift that experts say would likely be embraced by many businesses but resisted by investors.

"I'd like to see twice (a year), but we're going to see", Trump said. "That would allow greater flexibility & save money", he tweeted.

On Twitter, Trump said that one executive had suggested the change as a way to boost business, but did not name the individual or the company.

Ultimately, the SEC is an independent commission-led agency and the president can not force it to change policies.

"In speaking with some of the world's top business leaders I asked what it is that would make business (jobs) even better in the U.S. 'Stop quarterly reporting & go to a six month system, ' said one".

Publicly traded companies in the United States now file their earnings reports every three months, or four times a year.


SEC spokesmen didn't respond to requests for comment.

Nooyi confirmed she had talked to Trump about the change of schedule.

Public companies must report their sales, profits and the state of the company's balance sheet every quarter. Still, Clayton hasn't floated reducing the number of times that companies must disclose their financial performance each year.

Indeed, corporate stocks are known to see sharp gains and falls on the heels of quarterly earnings releases that beat or miss forecasts - and market watchers have often said investors' quick reactions are unwarranted or ill-advised. 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.

Europe has backed away from requiring companies to file quarterly reports.

"Investors will demand they get their information", Ed Yardeni, founder of Yardeni Research Inc., said in a Bloomberg Television interview. Less-frequent public disclosures could hand another advantage to sophisticated investors with easy access to corporate executives, corporate governance experts said.

He would need to draft a proposed rule-change which would then be put to an industry consultation during which investors, companies, exchanges, pension funds and public interest groups would likely bombard the SEC with information.

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