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'Stop quarterly reporting', Trump tweets for his business friends

19 August 2018

"That would allow greater flexibility & save money", he said in a post on Twitter on Friday. He said one executive suggested the change as a way to boost business, although he did not name the individual or the company.

It's a move that would benefit businesses and workers, the president said. But moving away from reporting earnings every three months would be a much more dramatic change that would nearly certainly trigger resistance from shareholders who want transparency from the companies they invest in. "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, including Clayton.

Eliminating the quarterly reporting requirements could also lead investors to fill the information vacuum by relying more heavily on rumors and off-the-cuff remarks made by company executives, corporate governance experts say.

Trump said the issue was brought to his attention recently by Indra Nooyi, the chief executive officer of PepsiCo Inc.

The SEC could make such a change on its own without Congress passing legislation, but that doesn't mean it will, said David Martin, who previously ran the agency unit that oversees corporate filings. The President has highlighted a key consideration for American companies and, importantly, American investors and their families - encouraging long-term investment in our country.

Donald Trump has called for U.S. companies to issue financial reports just twice a year rather than four times.

Last fall it laid out changes to capital market rules in a U.S. Treasury report but did not advocate scrapping quarterly reporting.

Quarterly reporting by public companies has always been a cornerstone of US capital markets, with Wall Street analysts known for making closely monitored recommendations on buying or selling stock.

Companies that want to move away from short-term scrutiny should instead stop publicly projecting the next quarter's earnings, Pozen added. "Many investors and market participants share this perspective on the importance of long-term investing", he said. Well-known chief executives, including JPMorgan Chase & Co's Jamie Dimon, Berkshire Hathaway Inc's Warren Buffett and BlackRock Inc's Larry Fink have raised concerns about the focus placed on earnings reports and guidance.

SEC Chairman Jay Clayton, a Trump nominee, has said increasing the number of public companies and initial public offerings are among his top priorities.

The Securities Exchange Act of 1934 was created to foster greater financial transparency and accuracy and to reduce fraud or manipulation. "Investors need timely, accurate financial information to make informed investment decisions".

'Stop quarterly reporting', Trump tweets for his business friends