Canceling the mandatory disclosure of quarterly reports for U.S. stocks? Trump really might succeed
Trump is pushing for the mandatory disclosure of U.S. stock quarterly reports to be changed to a semi-annual reporting system. Although there are differences of opinion among investors, the likelihood of this proposal's success is much higher than during Trump's first term, due to the close cooperation between the new SEC chairman and the White House, as well as a more favorable congressional environment. Analysts predict that the U.S. market may eventually follow Europe and mandate semi-annual reports, but many companies may choose to voluntarily maintain quarterly reports
The Trump administration is once again pushing for a significant reform that could reshape the information disclosure rules of the U.S. capital markets, and this time, the chances of success are much higher than during his first term.
According to a Monday article, Trump proposed a new idea on the 16th: companies would no longer be required to release quarterly financial reports, but instead do so semi-annually. 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 running the company correctly.
In response, a spokesperson for the SEC stated on Monday evening that the agency is prioritizing this proposal. Although investor groups may continue to oppose it, some analysts expect that by 2027, the SEC may shift to a semi-annual reporting system similar to that in Europe. They also noted that many large companies may still choose to maintain the current quarterly reporting rhythm.
This proposal is not new. During Trump's first term, then-SEC Chairman Jay Clayton sought public opinion on similar calls, but the initiative was ultimately shelved due to a crowded agenda and the impact of the COVID-19 pandemic. Now, the environment is entirely different.
"New SEC" Under White House Leadership
The core reason for the advancement of this reform is that the White House is exerting more direct influence over the agendas of independent agencies like the SEC. According to insiders and analysts in Washington, current SEC Chairman Paul Atkins is a free-market advocate and a long-time critic of cumbersome corporate regulation, and he is working closely with the White House.
Unlike previous practices, this White House has reviewed the SEC's regulatory agenda and has taken the lead on major issues such as cryptocurrency policy and SEC personnel reductions. The broad agenda released by the SEC this month includes a plan for a project aimed at "streamlining corporate disclosures" scheduled for next April, creating potential pathways for initiating public consultation processes.
James Angel, a financial regulation expert at Georgetown University's McDonough School of Business, pointed out:
"The Trump 2.0 administration is very different from the 1.0 administration. The 2.0 version is bolder than 1.0, so we might actually see action."
He mentioned the SEC's earlier friendly stance towards the cryptocurrency industry, and believes "this opportunity is much greater." Additionally, analysts believe that Paul Atkins faces a more favorable Congress and a court system leaning towards conservatives, and has more time to complete the typically lengthy rule-making process.
Business Support and Investor Discrepancies
For a long time, large business groups, including the U.S. Chamber of Commerce and the Business Roundtable, have been advocating for streamlined corporate reporting rules. Bill Hulse, Senior Vice President of the U.S. Chamber of Commerce, stated in a statement:
"Modernized disclosures help alleviate the costly and burdensome compliance requirements while allowing investors to focus more easily on key information."
However, there are differing opinions among investors. An anonymous executive from a Washington industry organization stated that the White House's strong interest in the SEC's work increases the likelihood of the rules becoming a reality, but he also pointed out that some investors may oppose this change.
Andrew Horowitz, an investment advisor from Fort Lauderdale, Florida, warned:
"The idea of getting investors to focus on the long term rather than three-month data sounds good. However, this could lead to greater volatility during earnings season, as the range of potential outcomes would cover a longer time frame."
The Council of Institutional Investors, a major investor group representing employee benefit funds and retirement savers, stated that its position has not changed since 2019, when they opposed this potential change, believing that quarterly disclosures are a "necessary guide" for investment decisions.
Could the "European Model" Become a Reality?
Despite the resistance, analysts believe the prospects for reform are becoming clearer. Brian Gardner, Stifel's chief Washington policy strategist, predicted in a report on Tuesday that the SEC could issue a regulatory proposal as early as this year.
Analysts expect that the U.S. market may ultimately shift to a mandatory semi-annual reporting "European model," but the new rules may not completely eliminate quarterly reports. Many large companies are likely to voluntarily continue to report quarterly due to investor relations and market expectations.
Notably, some investors advocating for more action on long-term sustainability issues have expressed cautious support for this idea. White House spokesperson Taylor Rogers stated in a statement that the White House is working with other government departments to achieve "America's great long-term revival."
