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President Trump Is Interested in a Major Shakeup for Corporate Earnings Reports

19 August, 2018, 21:11 | Author: Kristi Dunn
  • Donald Trump

US President Donald Trump said on Friday he has asked the U.S. Securities and Exchange Commission to study the impact of allowing companies to file reports with the financial regulator every six months instead of every quarter.

"I'd like to see twice, but we're going to see", Trump later told reporters when asked about his tweet.

The idea came from an unnamed "top business leader", Mr. Trump wrote, although the idea has been bandied around for decades.

While Trump can not force Clayton to make changes, as a matter of courtesy the SEC chairman may promise to study the issue.

"In speaking with some of the world's top business leaders I asked what it is that would make business (jobs) even better in the US", the president wrote on Twitter.

"[A six-month system] would get investors and companies to think longer-term", Svezia said.

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SEC spokesmen didn't immediately respond to a request for comment. Chairman Jay Clayton issued a statement Friday saying the agency "continues to study" reporting requirements, including how frequently companies should announce results.

But he said energy companies would probably still report some oil and gas well data every three months to please investors. The report compares company earnings with that of the previous year.

He picked a good moment to put the idea forward: Elon Musk is in the midst of a dramatic push to take Tesla Inc private in large part, he says, to remove the pressures of having to report quarterly earnings. And corporate leaders and trade groups have increasingly vented about Wall Street's obsession with short-term earnings and revenue targets, arguing that they can prevent firms from growing their businesses and creating jobs.

Trump tweets the U.S. could abandon quarterly financial reporting after meetings with business leaders. Two influential figures, JPMorgan Chase CEO Jamie Dimon and billionaire investor Warren Buffett, recently urged together that public companies either reduce or eliminate quarterly earnings guidance. Less-frequent public disclosures could hand another advantage to sophisticated investors with easy access to corporate executives, corporate governance experts said.

Last fall it laid out a blueprint for changes to capital market rules in a U.S. Treasury report, but did not advocate scrapping quarterly reporting. In 1996, nearly 950 companies went public, according to data compiled by Bloomberg. Some said the change could help companies to invest more in their businesses rather than race to show profit gains each quarter.

"Investors need timely, accurate financial information to make informed investment decisions", Amy Borrus, deputy director of the Council of Institutional Investors, said in a statement.

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