Trump asks SEC to study ending quarterly earnings for public companies

Trump calls for study on ending to quarterly earnings reports

By tweeting that the switch would give companies more flexibility and reduce costs, Trump waded into a long-running debate on how often public companies should report.

But he said energy companies would probably still report some oil and gas well data every three months to please investors.

"We are not thinking far enough out. So we're looking at that very, very seriously", Trump said as he was boarding Marine One on the White House lawn Friday morning. Even SEC Chairman Jay Clayton, a Trump appointee who has made boosting the number of initial public offerings one of his top priorities, hasn't floated the idea of scaling back reporting requirements. While Trump's tax cuts and deregulation push have long earned their favor - and Friday's proposal can be seen as part of that effort - he has also befuddled much of the business community by dragging the country into multiple trade feuds and by jawboning companies via Twitter.

The regulatory burdens of being a public company have been in the spotlight lately, including playing a role in why Elon Musk wants to take Tesla Inc. private. It's rare for presidents to make public demands of such regulators.

"I'd like to see twice but we're going to see", Trump said. "Many investors and market participants share this perspective on the importance of long-term investing". Elizabeth Warren (D-Mass.) has proposed a more sweeping restructuring of corporate behavior, including requiring companies with more than $1 billion in annual revenue to weigh the interests of all stakeholders - including workers and local communities, in addition to shareholders - in their decision-making.

Trump tweets the United States could abandon quarterly financial reporting after meetings with business leaders.

Billionaire investor Warren Buffett and JPMorgan Chase & Co Chief Executive Jamie Dimon wrote in the Wall Street Journal in June that US companies should move away from giving quarterly guidance, arguing it holds back spending on hiring, investment and research, but did not call for an end to quarterly reporting.

Meanwhile, Svezia noted, less frequent updates and disclosures would likely be a source of frustration for investors.

In theory, this information helps investors make informed decisions about the future success of a company. The report compares company earnings with that of the previous quarter.

Trump "was a CEO, and managers are never wild about the constant reporting".

"There are often quarterly metric fluctuations that tend to even out over six months, so one would think that some of the extreme, arguably knee-jerk reactions invests have would be reduced", explained B. Riley FBR analyst Jeff Van Sinderen. But some argue the quarterly requirement puts unnecessary pressure on companies because it forces them to focus on short-term results.

"It is not the fact that you report quarterly that is the problem; it's a bad management team", he said.

"You have such a long dark period where there is no information going out to the public", said Robert Pozen, senior lecturer at MIT Sloan School of Management and former vice chairman of Fidelity Investments. 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.

"They are more likely to react to other types of information and more likely to overreact", said Jill E. Fisch, a co-director of the Institute for Law and Economics at the University of Pennsylvania.

There are many potential downsides, including the prospect that fewer financial reports could encourage insider trading and exacerbate volatility around earnings.

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