U.S. President Donald Trump has reportedly asked the U.S. Securities and Exchange Commission (SEC) to consider the impact of nixing required quarterly earnings reports in favor of half-year reports. Reports in The Washington Post on Friday (Aug. 17) said Trump tweeted the proposal would “allow greater flexibility and save money.”
“We are not thinking far enough out,” the President said Friday morning in front of reporters. “We’ve been accused of that for a long time, this country. So we’re looking at that very, very seriously. We’re looking at twice a year instead of four times a year.”
In a statement, SEC Chairman Jay Clayton confirmed that Trump had drawn attention to “a key consideration for American companies,” noting that the SEC is currently reviewing organizations’ public disclosure rules. That includes “frequency” of those disclosures, he said.
Separate reports in Reuters on Friday said the news had already caused some backlash in the corporate finance community. Chief Market Analyst Naeem Aslam of ThinkMarkets told the publication that such a change “reduces the transparency for investors and they will be left in the dark for longer.”
He added, “Such a strategy is a great recipe to create the biggest loop hole in the financial system. Moreover, under such conditions, any blunder would create a serious threat, not for the markets only, but for the economy as well.”
In another statement, Stan Shipley, managing director and strategist at Evercore ISI, said the assumption is that corporations would be able to obtain a longer-term view with bi-annual reports, instead of quarterly ones that are “not exactly true.”
“Most research suggests that companies that are well-managed and have a longer-term perspective do better anyway, and are able to manage their quarterly reports,” he said.
Amy Borrus, deputy director of the Council of Institutional Investors, said according The Washington Post, “Investors need timely, accurate financial information to make informed investment decisions.”