It will be tough for Trump's SEC to overhaul reporting rules

Donald Trump

The report compares company earnings with that of the previous year.

British companies are obliged to report their financial results every six months, although some provide more regular updates....

Companies' intense focus on short-term gains rather than long-term investment and growth, and the tying of executives' compensation to quarterly earnings targets, has been widely criticized - and blamed in the case of big banks for helping fuel the 2008 financial crisis.

"One business leader asked him to move towards a system of reporting every six months, he said on Twitter".

The SEC has been reluctant to make changes in quarterly reporting, which has always been a cornerstone of United States capital markets.

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. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year".

Trump recently hosted company leaders at his private golf club in Bedminster, New Jersey, including the heads of Apple Inc AAPL.O , Fiat Chrysler Automobiles NV FCHA.MI , Boeing Co BA.N , FedEx Corp FDX.N , and Honeywell International Inc HON.N .

Tesla chief executive Elon Musk also cited the issue when explaining why he has launched a surprise effort to take the $50 billion auto company private. Japan, though, moved in the opposite direction, gradually forcing companies to shift from semi-annual to quarterly reporting during the 2000s.




Quarterly financial reports are a staple of US corporate practice. "We start preparing three weeks in advance every quarter, essentially taking nearly a third of executives' time each quarter", said Bryan Sheffield, chief executive of shale oil producer Parsley Energy Inc (PE.N).

Billionaire investor Warren Buffett and JPMorgan Chase & Co Chief Executive Jamie Dimon wrote in the Wall Street Journal in June that USA companies should move away from giving quarterly guidance, arguing it holds back spending on hiring, investment and research, but did not call for an end to quarterly reporting.

"Less frequent reporting can raise the cost of capital", he said.

Regulators can conduct studies of their own volition, or will do so at the request of Congress, the president, or the public.

Scrapping the quarterly requirement "is a solution in search of a problem", said Charles Elson, a professor and director of the University of Delaware's Weinberg Center for Corporate Governance.

In theory, this information helps investors make informed decisions about the future success of a company. What is clear is that investors are more reluctant to invest with companies when they have less information on their performance.

"You have such a long dark period where there is no information going out to the public", Pozen said.

There are many potential downsides, including the prospect that fewer financial reports could encourage insider trading and exacerbate volatility around earnings.

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