Trump backs CEOs, proposes easing corporate reporting rules

President Donald Trump

Quarterly financial reports are a staple of US corporate practice.

Listed companies in the USA must report financial results every three months, but in many other countries businesses are mandated to do so only twice a year.

Others said quarterly disclosures are essential for investment decisions and support richer US stock valuations, and that a change could make shares more volatile. The Commissioners' offices did not immediately respond to a request for comment.

He said that after meeting with business leaders he had asked the US Securities and Exchange Commission to investigate making such a change.

SEC Chairman Jay Clayton, a Trump nominee, has said increasing the number of public companies and initial public offerings are among his top priorities.

Experts have long asserted that the practice of companies publicly forecasting every quarter how they expect earnings to shake out puts too much stress on short-term performance and stock price gains. "We start preparing three weeks in advance every quarter, essentially taking nearly a third of executives' time each quarter", said Bryan Sheffield, chief executive of shale oil producer Parsley Energy Inc (PE.N).




Under Trump appointee chairman Jay Clayton, the SEC has taken steps to relax rules for issuers, including allowing firms going public to file information confidentially, and is now discussing relaxing some other compliance rules. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year". 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.

"It's cockamamie idea. For starters, what's the difference between six and three months?". I find it very rich that he's proposing this with some veil that it's going to help companies think long-term. It isn't immediately clear what impact it would have on stock markets or the broader economy if public companies moved to reporting their earnings every six months rather than on a quarterly basis.

The Trump administration has said it would like to reduce red tape it blames for a decline in public listings. That act also created the SEC, which sets the regulations which govern those quarterly reports.

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.

Earlier this year, billionaire investor Warren Buffett and Jamie Dimon, the head of JPMorgan Chase, urged companies to stop issuing quarterly earnings guidance.

"The president has highlighted a key consideration for American companies and, importantly, American investors and their families - encouraging long-term investment in our country", Clayton said. One of the reasons Tesla CEO Elon Musk wants to take his company private, he told his employees last week, was the way quarterly reports distort decisions at the company. "Investors need timely, accurate financial information to make informed investment decisions".

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