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

Daniel Fowler
August 19, 2018

The Securities and Exchange Commission should study moving the reporting requirement to every six months instead of every three, Trump said.

SEC chairman Jay Clayton issued a statement saying the agency "continues to study public company reporting requirements, including the frequency of reporting".

Some market commentators believe the pressure to meet targets every 90 days causes executives to make decisions based on short-term thinking to satisfy the market at the expense of the long-term viability of their companies.

US President Donald Trump's proposal, released via Twitter, would do away with the decades-old tradition of obligating companies to file quarterly reports and move to a semi-annual system. Please read our before commenting.

Later, reporters asked the president to give more insight into his tweet.

Some investors on Friday said quarterly disclosures are essential for investment decisions and supported richer USA stock valuations, and that shares could become more volatile if companies report twice yearly. In a statement, Nooyi said she and other CEOs "have been discussing how to better orient corporations to have a more long-term view". The most recent data from the United Kingdom shows that only 57 of the companies in the benchmark FTSE 100 index were still issuing quarterly reports as of September 2017, according to the Investment Association.

He said when companies report only twice a year, the reaction in markets to their results is typically more volatile than the reaction to quarterly results.

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Billionaire investor Warren Buffett and JPMorgan Chase & Co Chief Executive Jamie Dimon wrote in the Wall Street Journal in June that US 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.

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

Druckenmiller noted that investors like to know what's going on with the companies they invest in. A statistic they often point to is the drop in initial public offerings over the past 20 years. That number fell to 237 in 2017.

President Trump recently hosted several top company leaders while on vacation at his private golf club in Bedminster, New Jersey, including the heads of Apple Inc., Fiat Chrysler Automobiles NV, Boeing Co., FedEx Corp, and Honeywell International Inc.

But moving away from reporting earnings every three months would be a much more dramatic change that would nearly certainly trigger resistance from shareholders who want transparency from the companies they invest in. "But that ship has sailed", said Nell Minow, vice chair of ValueEdge Advisors, a firm that advises institutional investors on corporate governance issues.

"It made sense to me", he added.

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