Trump asks SEC to study ending quarterly earnings for public companies

President Donald Trump

Oliver Contreras POOL EPA-EFE REX Shutterstock President Donald Trump

He suggested that a switch to only half-yearly reporting would save companies money, echoing the wishes of several top chief executives.

President Donald Trump brought a long-simmering debate on Wall Street to the surface Friday when he prodded regulators to look into scaling back how often publicly traded companies report financial results.

Half-yearly reporting would mark a huge change in USA disclosure requirements and put them in line with European Union and United Kingdom rules. 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.

Jay Clayton, Chairman of the Securities and Exchange Commission, listens during an interview with CNBC at the Sandler O'Neill + Partners Global Exchange and Brokerage Conference in NY, U.S., June 6, 2018. "I have asked the SEC to study!" - he continued.

Trump's proposal, released via Twitter, would do away with the decades-old tradition of obligating companies to file quarterly reports and move to a semi-annual system.

Trump said the idea came from conversations with the "world's top executives", including PepsiCo's outgoing chief executive, Indra Nooyi. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year".

Businesses have long complained that the reports require company executives to focus too much on the short term.

Many market participants "have been discussing how to better orient corporations to have a more long-term view", Nooyi said in an emailed statement Friday. "My comments were made in that broader context, and included a suggestion to explore the harmonisation of the European system and the United States system of financial reporting".

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.

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

"The president has highlighted a key consideration for American companies and, importantly, American investors and their families - encouraging long-term investment in our country", Clayton said.

Quarterly reporting has always been a cornerstone of US capital markets, with bank analysts known for making closely monitored recommendations on buying or selling stock tied to the numbers.

In theory, this information helps investors make informed decisions about the future success of a company.

The president did not name the leaders. One provision of the bill includes a requirement that the SEC review the quarterly reporting requirement. 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.

Companies that want to distance themselves from short-term scrutiny should instead stop publicly projecting the next quarter's earnings, Pozen added.

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