Trump ignites debate on earnings reports

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

Trump asks SEC to study ending quarterly earnings for public companies

President Donald Trump says he's asking federal regulators to look into the effectiveness of the quarterly financial reports that publicly traded companies are required to file.

Trump said on Twitter that meetings with business leaders had convinced him that the change would give companies more flexibility and reduce costs. According to him, PepsiCo Inc Chief Executive Indra Nooyi, who is leaving the company, is one of the business leaders who broached the topic with him recently.

Half-yearly reporting would mark a huge change in US disclosure requirements and put them in line with European Union and United Kingdom rules.

"I'd like to see twice but we're going to see", Trump said.

The UK, for example, does not require companies to report earnings every quarter, though more than 90% of listed firms still do, according to MarketWatch.

There are also tremendous expenses tied to preparing quarterly and annual reports.

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.

In a report published by the US Treasury past year, the administration outlined policies it hoped would revitalize listings - but did not go as far as suggesting quarterly reporting requirements be scrapped.

"Many market participants, as well as the Business Roundtable which we are a part of, have been discussing how to better orient corporations to have a more long-term view", Nooyi said in a statement emailed to Reuters.

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The discussion with Pepsi's CEO wasn't the first time White House officials have heard from the business community about quarterly reporting requirements.

Trump believes he has the support of some executives for a change.

The Council of Institutional Investors (CII) believes that public companies should continue to report quarterly.

Trump's proposal, offered in a 7:30 a.m. tweet, took the securities industry by surprise and prompted some to worry that it could unintentionally lead to more market volatility and corporate mischief.

Earlier this year, billionaire investor Warren Buffett and Jamie Dimon, the head of JPMorgan Chase, urged companies to stop issuing quarterly earnings guidance.

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

Last fall it laid out changes to capital market rules in a U.S. Treasury report, but did not advocate scrapping quarterly reporting. A statistic they often point to is the drop in initial public offerings over the past 20 years.

In a Friday statement, White House spokeswoman Lindsay Walters said Trump is interested in "examining this issue on whether short-term earnings reporting requirements for public companies reduce incentives for them to engage in long-term investing in the United States". In 1996, nearly 950 companies went public, according to data compiled by Bloomberg.

No. The SEC is independent of the administration and sets its own agenda.

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