President Donald Trump recently sparked a conversation about changing how companies report their earnings. He suggested that instead of quarterly reports, companies might only need to provide updates every six months. He shared this idea on Truth Social, mentioning it would need approval from the Securities and Exchange Commission (SEC). Trump believes this change would reduce costs and allow business leaders to concentrate on managing their companies better.
He pointed out that while the U.S. operates on a short-term mindset with quarterly updates, countries like China plan for the long term—up to a century. This notion has been debated before. Notably, in 2018, Warren Buffett and Jamie Dimon published a piece in The Wall Street Journal, arguing that focusing too much on quarterly earnings leads to poor long-term decisions. They advised against mandatory quarterly guidance, emphasizing the importance of sustainable strategies.
Currently, U.S. rules require companies to report earnings quarterly, but they don’t have to provide forecasts. Changes to this system could come from the SEC or Congress. Some argue that quarterly reports provide essential information for investors, making markets more transparent.
Interestingly, while Trump compares U.S. practices with China’s, it’s worth noting that Chinese companies must also file quarterly earnings, along with semiannual and annual reports. However, companies traded in Hong Kong have a more relaxed schedule and only report every six months.
This proposal aligns more closely with the requirements in places like the U.K. and the European Union, where companies can choose to report quarterly but are mainly expected to do so semiannually. Earlier this year, Norway’s sovereign wealth fund also suggested a shift to semiannual reporting, believing it would encourage businesses to focus on long-term growth.
As the discussion continues, reactions on social media highlight a mix of skepticism and support for Trump’s idea. Many people wonder if reducing reporting frequency might lead to greater corporate accountability or if it risks making companies less transparent.
Overall, this shift could significantly impact how companies operate and how investors receive information. The balance between short-term performance and long-term stability remains a key factor in these discussions.
For further insights, you can explore more detailed analyses from trusted sources, like a report from CNBC.
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