Trump Proposes Ending Quarterly Earnings Reports: What a Shift to Biannual Reports Means for Investors

President Trump is pushing to change a long-standing requirement in U.S. finance: quarterly earnings reports. If his idea goes through, companies would only need to report their financials every six months. The U.S. Securities and Exchange Commission (SEC) has mandated quarterly reports since 1970.

Trump argues that moving to semi-annual reporting would save companies money and allow them to focus on long-term strategies rather than short-term gains. He pointed out that businesses in China often think decades ahead, while U.S. companies are pressured to deliver quick results.

This concept isn’t new. Some experts and business leaders have suggested similar changes before. In fact, during his previous term, Trump asked the SEC to explore the idea, though nothing changed at that time.

Now, analysts like Jaret Seiberg from TD Cowen see a 60% chance that the SEC will make this change. The rationale is that it would be a win for SEC Chairman Paul Atkins, aligning with Trump’s agenda of reducing regulatory burdens.

The Long Term Stock Exchange also supports this shift. Its founder, Eric Ries, has criticized the current focus on short-term financials, arguing it harms long-term business planning.

Pros and Cons

Supporters of fewer reports claim that quarterly earnings can be costly, discouraging companies from going public. They argue that the pressure to meet short-term targets distracts executives from long-term planning.

However, critics warn that moving to six-month reports could leave investors in the dark. They argue that quarterly updates provide necessary information about financial health and emerging risks. Sam Kampner, an executive, pointed out that having less information could lead to uninformed investment decisions.

What Does the Research Say?

A 2018 study from the Harvard Business Review looked at a similar case in the U.K., which stopped requiring quarterly reporting in 2014. Professor Shivaram Rajgopal noted that while the change didn’t eliminate problems of short-term thinking and earnings manipulation, it also didn’t compromise all transparency.

Looking Ahead

If the SEC decides to proceed, it could take at least six months to finalize a proposal. Analysts will be watching for any mention of this issue in public speeches by key SEC figures.

This potential change raises important questions about balancing business efficiency with investor needs, an ongoing debate in financial circles.

For further reading, check the Harvard Business Review’s findings on this topic here.

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Finance, Donald Trump