Published: Sun, August 19, 2018
Money | By Arnold Ball

President Trump asks SEC to study abolishing quarterly earnings reports

President Trump asks SEC to study abolishing quarterly earnings reports

President Trump said he had "asked the SEC to study" such a move.

U.S. President Donald Trump on Friday said meetings with corporate executives had prompted him to ask the U.S. Securities and Exchange Commission (SEC) to study letting public companies file financial reports every six months instead of every quarter.

In a tweet, he argued a longer time frame would "allow greater flexibility & save money". He said one executive suggested the change as a way to boost business, although he did not name the individual or the company.

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

"I asked [the leaders] what it is that would make business (jobs) even better in the U.S.", Trump tweeted. It isn't immediately clear what impact it would have on stock markets or the broader economy if public companies moved to reporting their earnings every six months rather than on a quarterly basis.

SEC spokesmen didn't respond to requests for comment.

Trump believes he has the support of some executives for a change. Chairman Jay Clayton issued a statement Friday saying the agency "continues to study" reporting requirements, including how frequently companies should announce results.

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.

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It's a move that would benefit businesses and workers, the president said. 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.

It "also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term", Musk said.

Doing away with quarterly reports would help corporations save money.

The SEC was created in 1934 in the midst of the Great Depression and requires publicly-traded companies to issue quarterly and annual earnings reports to keep the public informed on their operations and financial condition.

In a report published by the US Treasury a year ago, the administration outlined policies it hoped would revitalize listings - but did not go as far as suggesting quarterly reporting requirements be scrapped.

The US Chamber of Commerce and other lobbying groups have also blamed compliance burdens for preventing more companies from selling shares.

In 1998, there were around 7,500 listed companies in the United States, compared with around 4,300 in 2017, according to data compiled by the World Bank.

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