Trump wants to scrap quarterly reports
- Author: Eleanor Harrison Aug 20, 2018,
Aug 20, 2018, 4:32
In a statement on Friday afternoon, SEC Chairman Jay Clayton said Trump has raised a "key consideration" for USA companies and that the agency's "Division of Corporation Finance continues to study public company reporting requirements, including the frequency of reporting".
U.S. President Donald Trump said Friday that he wanted the Securities and Exchange Commission (SEC) to explore doing away with quarterly corporate reports, replacing them with filings every six months.
Trump said on Twitter that meetings with business leaders had convinced him that the change would give companies more flexibility and reduce costs.
However feasible or likely the plan is, Trump's tweet does represent the sort of business-minded approach that corporate America hoped it would get from having a former executive in the White House.
According to Mr Trump, top business leaders from around the world claimed that removing the administrative burden of such regular reporting would boost the United States economy and create jobs.
The chief executive officer who urged Trump to look into six-month reporting is PepsiCo Inc.'s Indra Nooyi, the president told reporters in Washington after sending his tweet.
While Trump nominated SEC Chairman Jay Clayton as the agency's head, as well as two of its three commissioners (one additional Trump nominee is pending before the U.S. Senate), he does not oversee its work.
Trump believes he has the support of some executives for a change. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year".
Experts have long asserted that the practice of companies publicly forecasting every quarter how they expect earnings to shake out puts too much stress on short-term performance and stock price gains.
Under Trump appointee chairman Jay Clayton, the SEC has taken steps to relax rules for issuers, including allowing firms going public to file information confidentially, and is now discussing relaxing some other compliance rules.
It's unclear whether management at companies that report semi-annually take a longer-term investment strategy than management at companies reporting quarterly, said Salman Arif, a business professor at Indiana University who has studied the difference in reporting periods.
No. While the Securities Exchange Act of 1934 requires companies to report periodically, the SEC has the discretion to draw up or change the specific rules on how frequently this happens. The report compares company earnings with that of the previous year. The SEC is the regulatory arm of the SEA, and since its formation, quarterly earnings reports have been mandatory. Japan gradually moved from bi-annual to quarterly reporting during the 2000s.
"I do believe it will help upper management".
"Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace", said Amy Borrus, CII's deputy director. Well-known chief executives, including JPMorgan Chase & Co's Jamie Dimon, Berkshire Hathaway Inc's Warren Buffett and BlackRock Inc's Larry Fink have raised concerns about the focus placed on earnings reports and guidance.