Trump proposed: Companies will no longer be required to release quarterly financial reports, but instead switch to biannual reports

Local time on Monday, U.S. President Trump proposed a new idea: to no longer require companies to release quarterly financial reports, but instead to do so every six months.

In a post on Truth Social, Trump stated that this idea needs approval from the U.S. Securities and Exchange Commission (SEC) and would save money, allowing management to focus on properly running the company.

During Trump's first term, he had asked the SEC to study this issue, but no recommendations were made.

Current SEC regulations require companies to release financial reports quarterly, but providing performance forecasts is voluntary. Changes to the rules can be made directly by the SEC or modified through Congress.

Procedurally, changes to the quarterly reporting system do not require support from the U.S. Congress; a majority vote within the SEC is sufficient. Currently, Republicans hold a 3-1 advantage in the SEC, with one seat vacant. Sarah Bianchi, Chief Strategist for International Political Affairs and Public Policy at Evercore ISI, stated that the process could take 6 to 12 months.

SEC Chairman Paul Atkins has not commented on the matter. The White House declined to further comment on Trump's post.

Bianchi, a former U.S. Deputy Trade Representative, wrote in a report:

Various U.S. administrations have guided the SEC's policy direction to varying degrees, and with Trump's directive, this matter must now be taken seriously as a possibility. However, the SEC has historically maintained a degree of operational independence.

If the SEC's efforts to reconsider quarterly reporting make progress, it could also spark discussions about when and how companies release performance guidance and communicate with investors, which would have significant implications for the public markets.

The rationale for the quarterly reporting system has also been questioned in the past. In 2018, Berkshire Hathaway Chairman Warren Buffett and JPMorgan CEO Jamie Dimon suggested eliminating quarterly performance guidance in a commentary piece in The Wall Street Journal, but did not advocate for the elimination of quarterly reports. The two wrote:

In our experience, quarterly performance guidance often leads companies to focus excessively on short-term profits at the expense of long-term strategy, growth, and sustainability.

Earlier this year, the Norwegian Sovereign Wealth Fund proposed switching to semi-annual reports, arguing that extending the time frame would allow companies to focus on long-term development. The Long-Term Stock Exchange trading platform also supports reducing the frequency of financial report releases.

Supporters of the current system argue that quarterly reports provide timely opportunities for investors and transparency regarding publicly listed companies. Art Hogan, Chief Market Strategist at B Riley Wealth Management, said, “When you weigh the pros and cons on a whiteboard, the advantages of quarterly reports outweigh the disadvantages. If you have to wait six months for official results, I think it will create more difficulties than benefits.” Although executives have faced some criticism for misleading performance reports, the use of Generally Accepted Accounting Principles (GAAP) helps establish a standardized defense. As a result, financial reports in the United States are considered among the most transparent and reliable in the world.

Trump's proposal is closer to the practices in the UK and the EU, where companies are required to publish semi-annual reports but can choose to release quarterly financial reports.

However, Hogan believes it is unreasonable to compare American companies with European ones. He stated, "How many companies in the European market have a market value of $1 trillion, a 60% annual revenue growth, or a gross margin exceeding 50%? It is more appropriate for investors to receive more and more frequent information."

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