President Donald Trump has called for U.S. publicly traded companies to stop reporting quarterly earnings, advocating instead for semiannual (twice-per-year) financial reports.
He made the announcement on his social media platform, citing cost savings and a desire to shift corporate focus from short-term performance to long-term growth.
Instead of quarterly reports from companies like Disney, investors would only get reports twice a year. Giving them time to turn downward trends around in between investor calls and financial reports.
What Trump Is Asking
- In a recent post on Truth Social, Trump urged the Securities and Exchange Commission (SEC) to consider changing the requirement that companies file earnings reports every three months.
- He described quarterly reporting as burdensome, expensive, and said it forces executives to emphasize short-term metrics instead of longer-term planning.
Our current four-times-per-year reporting system has been in place since 1970 when the SEC moved from semiannual to quarterly reporting in order to improve transparency and reduce information asymmetry between companies and investors.
Some in the financial sector, including the Long-Term Stock Exchange (LTSE), have also had similar ideas in the past with the goal of prioritizing long-term gains.
Pros and Cons
With any change there are pros and cons to consider.
Pros
- Lower administrative and compliance costs for companies.
- Encourage executives to focus on sustainable, long-term business strategies rather than hitting quarterly targets.
Cons
- Reducing the frequency of earnings disclosures could decrease transparency, making it harder for investors to monitor company performance and spot financial risks.
- Less frequent reporting may increase market volatility and hamper the ability of financial analysts and shareholders to make well-informed decisions.
As of now, the proposal has been submitted to the SEC for review, but no final decisions have been made.
Source: Deadline
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