What Would Happen if the SEC Abandoned Quarterly Earnings Reports

The SEC requires such companies to share profit, revenue and other figures publicly every three months.

Trump said he called on the SEC to consider the change after talking with various business leaders. By tweeting that the switch would give companies more flexibility and reduce costs, Trump waded into a long-running debate on how often companies should report. According to him, PepsiCo Inc Chief Executive Indra Nooyi, who is leaving the company, is one of the business leaders who broached the topic with him recently.

The SEC is an independent commission-led agency, and the president can not force it to implement rule changes.

According to Mr Trump, top business leaders from around the world claimed that removing the administrative burden of such regular reporting would boost the U.S. economy and create jobs.

"[A six-month system] would get investors and companies to think longer-term", Svezia said.

"My comments were made in that broader context, and included a suggestion to explore the harmonization of the European system and the USA system of financial reporting".

Nooyi confirmed she had talked to Trump about the change of schedule. "So we're looking at that very, very seriously", Trump said as he was boarding Marine One on the White House lawn Friday morning.

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Publicly traded companies in the United States, as well as Canada, now file their earnings reports every three months, or four times per year. "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).

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

It's a move that would benefit businesses and workers, the president said.

"If public companies moved from quarterly to semi-annual reporting, that would deprive investors of timely information and dramatically increase the potential for insider trading", said Robert Pozen, Senior Lecturer at the MIT Sloan School of Management, who has studied the issue.

The Trump administration wants to cut red tape that it says is responsible for a 50% drop in companies coming to market over the past two decades, including relaxing some of the disclosure and compliance requirements for listed companies and those looking to go public.

"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. That was the argument made by Jamie Dimon, the chief executive of JPMorgan Chase, and investor Warren E. Buffett in a widely shared op-ed published by the Wall Street Journal in June. A lot can change in a three-to six-month period, especially with all the disruption in technology. The report compares company earnings with that of the previous year.

He would need to draft a proposed rule-change which would then be put to an industry consultation during which investors, companies, exchanges, pension funds and public interest groups would likely bombard the SEC with information.

(Copyright © 2015. All Rights Reserved.)
 
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