Trump Calls On SEC to Study Ending Quarterly Reporting

Ivan Schwartz
August 19, 2018

That would allow greater flexibility & save money.

One criticism is that if companies are striving to report profit gains every quarter, they are more likely to buy back shares and cut costs than invest in their businesses.

SEC chairman Jay Clayton issued a statement saying the agency "continues to study public company reporting requirements, including the frequency of reporting". "One of the inherent issues with quarterly reporting is that it does tend to drive management to make decisions geared toward short-term metrics, which is not always in everyone's best interest".

The SEC consists of five commissioners appointed by the president, although there now are only four in place, three named by Trump.

Trump held a dinner for business executives on Aug 8, two days after Nooyi announced her departure, at his golf club in Bedminster, New Jersey.

"I'd like to see twice, but we're going to see", Trump later said to reporters outside the White House, when asked about his tweet about changing SEC reporting requirements.

And he said, the SEC already had implemented some regulatory changes and continued to consider others that "encourage long-term capital formation while preserving and, in many instances, enhancing key investor protections".

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Trump's proposal, offered in a 7:30 a.m. tweet, took the securities industry by surprise and prompted some to worry that it could unintentionally lead to more market volatility and corporate mischief.

The Trump administration has said it would like to reduce red tape it blames for a decline in public listings. Still, Clayton hasn't floated reducing the number of times that companies must disclose their financial performance each year.

The European Commission, among others, only requires semi-annual financial reports of companies there, although major European companies whose stock is traded in both the United States and Europe will report on a quarterly basis in order to comply with SEC regulations.

Billionaire investor Warren Buffett and JPMorgan Chase & Co Chief Executive Jamie Dimon wrote in the Wall Street Journal in June that companies should move away from quarterly guidance, but did not call for an end to quarterly reporting.

Companies that want to distance themselves from short-term scrutiny should instead stop publicly projecting the next quarter's earnings, Pozen added. "Investors need timely, accurate financial information to make informed investment decisions".

The quarterly reports provide important insight into a company's potential trouble spots, and force its executives to address shareholders' concerns while enforcing corporate discipline, corporate governance experts say.

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