The Financial Times reports that President Donald Trump hopes to replicate China's approach by eliminating quarterly earnings reports for publicly listed companies.
In a post on his Truth Social, Trump stated that securities regulators should stop requiring companies to release financial reports every three months and instead switch to a six-month reporting period.
Since 1970, the Securities and Exchange Commission (SEC) has required publicly traded companies to report quarterly. "This would save money and allow managers to focus on properly running their companies," Trump wrote.
During his first term, Trump requested the SEC to review the three-month and six-month reporting requirements. Nothing changed. Supporters of this change argue that quarterly reports are costly and time-consuming, discouraging companies from going public. They also claim that company executives focus too much on quarterly earnings targets rather than long-term planning.
The Long-Term Stock Exchange (LTSE) is also calling for changes in the frequency with which companies are required to report financial results. The LTSE is a stock market that advocates for companies to focus on long-term goals and performance, and it recently said it will submit a petition to the SEC requesting that companies report earnings once every six months, while still having the option to report quarterly.
"This petition represents an important step toward allowing truly long-term companies to focus on sustainable growth rather than quarterly noise," said Maliz Beams, CEO of LTSE, in a statement about the proposed petition.
Supporters of quarterly earnings reports argue that the reports provide valuable financial updates for investors and make them aware of new risks facing companies.
David S. Koo, an assistant professor of accounting at the Donald G. Coughlan School of Business at George Mason University, pointed out in a 2024 report that more frequent reporting usually provides investors who need to assess a company's health and prospects with more context and perspective.
Koo also said that this was the original intention of the SEC when it changed its policy in 1970 to require companies to disclose financial results on a quarterly basis rather than a semi-annual basis. This policy emerged from the booming economy after World War II, followed by a recession.
Companies that thrived during the expansion period were able to conceal their declining profits during the downturn, which harmed investors. "Koo said that the purpose of quarterly reporting was to reduce information asymmetry."
Original: www.toutiao.com/article/1843375406908428/
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