US companies should be allowed to report earnings every six months instead of quarterly, President Trump said on Monday, in what would be a major shift for corporate America if the Securities and Exchange Commission approved the change.
“This will save money, and allow managers to focus on properly running their companies,” Trump wrote in a Truth Social post, reprising an issue Trump pushed unsuccessfully during his first administration. He added that the change would be subject to approval by the SEC.
Currently, the SEC requires corporations to report their financial statements every 90 days. Half-yearly reporting would mark a huge change in disclosure requirements and put the US in line with the UK and several countries in the European Union.
In 2018, top corporate bosses Jamie Dimon and Warren Buffett argued in a Wall Street Journal op-ed that short-termism was harming the US economy.
Some investors have cautioned that waiting longer for financial information would mean less transparency and increase market volatility, making US stocks less attractive, although several on Monday said they supported the idea.
“From the perspective of better capital allocation by public companies, the focus on meeting quarterly earnings projections can lead to decisions based on short-term implications, when we would prefer management keep their eye on the long-term ball,” Burns McKinney, managing director and portfolio manager at NFJ Investment Group, Dallas, said in an email.
Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago, said he thought that there was “merit” to the idea.
“Having the reporting every quarter does put companies in a position where they are almost always preparing their quarterly reports. And not much usually changes quarter to quarter,” he said.
Trump’s views on the matter are not new. In 2018, he called for the SEC to consider eliminating reporting requirements for public companies during, but some investors pushed back on that proposal, which never gained traction.
The SEC did not immediately respond to Reuters’ request for a comment.
Investors argue that one of the reasons US stocks trade at a premium to equities elsewhere is due to greater financial reporting requirements. The benchmark S&P 500 index is trading at 24.3 times earnings estimates for the next 12 months, compared to 15.28 times for Europe’s STOXX 600, according to data compiled by LSEG.
Companies listed in the US did not always report their financial results on a quarterly basis. The regulator mandated the shift from semiannual to quarterly reporting in 1970.
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