Trump Directs SEC to Study Six-Month Reporting for Public Companies

Trump Directs SEC to Study Six-Month Reporting for Public Companies

Writing on Twitter, Trump said that he had discussions with business leaders and that one leader had asked him to move toward a system of reporting every six months.

President Donald Trump on Friday said he has instructed the US Securities and Exchanges Commission to investigate the abolition of quarterly financial reporting for US companies, after discussions with business leaders.

There will now be an investigation into the impact of this policy idea by the Securities and Exchange Commission (SEC), the president added.

For companies, "That would allow greater flexibility & save money", Trump tweeted.

But executives and other investors said Trump's argument made sense because it would cut costs of compiling and filing results and remove short-term distractions for those running companies. While some business leaders have groaned about the rigors associated with having to meet targets and metrics four times a year, the SEC has been reticent to make any changes.

In addition to this federal requirement, Clayton would have to subject any changes to the SEC's own formal rule-making process, which would require the support of the majority of the SEC's sitting commissioners.

But he said energy companies would probably still report some oil and gas well data every three months to please investors. Some high-profile executives, including JPMorgan Chase chief executive Jamie Dimon, have recommended that companies stop providing Wall Street analysts guidance on what to expect from quarterly profits, for example.

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The SEC requires listed United States companies to issue quarterly and annual financial reports to keep investors informed about their financial position.

In a statement Friday, Nooyi said her comments were part of a broader conversation about how to better focus companies toward long-term goals.

Experts have long asserted that the practice of companies publicly forecasting every quarter how they expect earnings to shake out puts too much stress on short-term performance and stock price gains. One provision of the bill includes a requirement that the SEC review the quarterly reporting requirement. In 1996, nearly 950 companies went public, according to data compiled by Bloomberg.

Doing away with quarterly reports would help corporations save money.

The U.S. Chamber of Commerce and other lobbying groups have blamed compliance burdens for preventing more companies from selling shares.

"They are more likely to react to other types of information and more likely to overreact", said Jill E. Fisch, a co-director of the Institute for Law and Economics at the University of Pennsylvania. "Investors need timely, accurate financial information to make informed investment decisions".

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