Trump floats possibility of changing reporting requirements for publicly traded companies

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

The Securities and Exchange Commission will continue to study the frequency of public company reporting after President Donald Trump called on the agency to consider shifting from quarterly to semiannual reports, SEC Chairman Jay Clayton said on Friday. Trump said in a Twitter post Friday. At a July rally in Florida, Trump said the chief executive of "one of the greatest companies in the world" urged him to press his tariff fight even though it would impact his business.

While Trump can not force Clayton to make changes, as a matter of courtesy the SEC chairman may promise to study the issue.

The President has highlighted a key consideration for American companies and, importantly, American investors and their families - encouraging long-term investment in our country.

But critics contend that new reporting requirements may not spur meaningful change given the deluge of company information available on social media. "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). "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year". One of the reasons Tesla CEO Elon Musk wants to take his company private, he told his employees last week, was the way quarterly reports distort decisions at the company.

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.

Quarterly financial reports are a staple of USA corporate practice.

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Following Clayton's statement, the agency also announced it had voted to adopt a rule change first proposed in 2016 to streamline some company accounting disclosures, in an unscheduled private commission vote.

Regulators have said that quarterly reporting acts as an essential check and balance on the market, but many companies complain that it is overly bureaucratic and gives an artificial, short-term view of their performance.

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. "[This is especially true] for companies in the consumer space - a lot can happen in six months".

In theory, this information helps investors make informed decisions about the future success of a company.

The quarterly reports provide important insight into a company's potential trouble spots, and force its executives to address shareholders' concerns while enforcing corporate discipline, corporate governance experts say.

In a joint letter published in The Wall Street Journal in June, JPMorgan CEO Jamie Dimon and the Berkshire Hathaway boss Warren Buffett argued against the practice of quarterly financial forecasting, saying it led to "short-termism" within companies.

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