U.S. President Donald Trump said Friday that he wanted the Securities and Exchange Commission (SEC) to explore doing away with quarterly corporate reports, replacing them with filings every six months.
"I'd like to see twice, but we're going to see", Trump later told reporters when asked about his tweet. Even SEC Chairman Jay Clayton, a Trump appointee who has made boosting the number of initial public offerings one of his top priorities, hasn't floated the idea of scaling back reporting requirements. The SEC is an independent commission-led agency, and the president can not force it to implement rule changes.
Switching to a six-monthly reporting system would "allow greater flexibility and save money", Mr Trump said.
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. The SEC is the regulatory arm of the SEA, and since its formation, quarterly earnings reports have been mandatory.
The SEC requires public companies to report profit, revenue and other figures publicly every three months.
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.
Earlier this year, billionaire investor Warren Buffett and Jamie Dimon, the head of JPMorgan Chase, urged companies to stop issuing quarterly earnings guidance. The report compares company earnings with that of the previous year. It's unclear whether management at companies that report semi-annually take a longer-term investment strategy than management at companies reporting quarterly, said Salman Arif, a business professor at Indiana University who has studied the difference in reporting periods.
Indeed, corporate stocks are known to see sharp gains and falls on the heels of quarterly earnings releases that beat or miss forecasts - and market watchers have often said investors' quick reactions are unwarranted or ill-advised. Less-frequent public disclosures could hand another advantage to sophisticated investors with easy access to corporate executives, corporate governance experts said.
But scrapping quarterly reporting is not on the SEC's near-term agenda, according to public records.
The US Chamber of Commerce and other lobbying groups have also blamed compliance burdens for preventing more companies from selling shares. What is clear is that investors are more reluctant to invest with companies when they have less information on their performance.
In theory, this information helps investors make informed decisions about the future success of a company.