In a recent effort to transform the American economy, President Donald Trump has supported the discontinuation of the long-standing practice of public companies reporting their financial results quarterly. This action would signify a significant change intended to address the short-term focus prevalent among executives fixated on satisfying investors. However, it would also result in a reduction of timely insights into the business landscape and the actual economy.
Trump stated in a Truth Social post that companies “should no longer be forced to ‘Report’ on a quarterly basis” and should instead provide results every six months. “This will save money, and allow managers to focus on properly running their companies,” Trump stated. Have you ever come across the assertion that, ‘China adopts a 50 to 100 year perspective on company management, while we operate our businesses on a quarterly timeline???’ Unfavorable outcome!!!! The critique of short-term thinking resonates with perspectives previously articulated by notable figures such as JPMorgan Chase CEO Jamie Dimon and esteemed investor Warren Buffett. Hillary Clinton, who faced Trump in the 2016 presidential election, expressed in 2016 her feelings of being “deeply distressed about quarterly capitalism.” The issue at hand is that Corporate America tends to prioritize appeasing the notoriously capricious stock market, often at the expense of addressing longer-term challenges and opportunities.
Furthermore, it is contended that the regulatory pressures associated with quarterly reporting have played a substantial role in the notable decrease in the number of public companies in the United States. Trump indicated that transitioning away from quarterly reporting would be “subject to SEC Approval,” referencing the necessary regulatory endorsement that would be mandated by authorities. The Securities and Exchange Commission could potentially have an opportunity to provide input on this change in the near future. The Long-Term Stock Exchange, supported by prominent investors such as Andreessen Horowitz and Founders Fund, is preparing to petition the SEC to remove the requirement for quarterly earnings reports, proposing instead that companies report their results biannually. “We hear a lot about how it’s overly burdensome to be a public company,” stated the exchange’s CEO Bill Harts in an interview with The Wall Street Journal, which was the first to report on the planned petition. “This is an idea whose time has come.” During the 2010s, regulatory bodies in the European Union and the United Kingdom ceased the mandate for companies to disclose quarterly results, transitioning to reporting periods of six months instead.
In 2018, Trump encouraged the SEC to examine the possibility of transitioning to a six-month reporting system to “allow greater flexibility & save money. We believe the switch to semi-annual from quarterly reporting has moved from improbable to probable though not guaranteed,” Jaret Seiberg, noted in a communication to clients on Monday. Seiberg observed an industry movement aimed at eliminating quarterly reporting, with Paul Atkins, the SEC chair appointed by Trump, supporting the reduction of regulatory burdens. “This seems to be a straightforward policy achievement for SEC Chair Paul Atkins to present to the President,” Seiberg noted. It is probable that SEC staffers will require a minimum of six months to develop a proposed rule and gather the necessary data to substantiate it. Shareholders, economists, policymakers, and various stakeholders have increasingly depended on these prompt updates from leading corporations.
Quarterly reports provide significant insights into changes in travel demand, major bank results offer early indicators of potential loan losses, and Big Tech reports presently deliver relevant updates on the current state of the artificial intelligence boom. Transitioning to a six-month reporting period may postpone the acquisition of critical insights and amplify stock fluctuations amid economic changes and variations across different industries.