UPDATE 4-Trump renews calls for ending quarterly reports for companies

U.S. companies should be allowed to report earnings every six months instead of on a quarterly basis, President Donald Trump said on Monday, in what would be a major shift for corporate America if the Securities and Exchange Commission approved the change. The idea, which revisits a similar call Tr

ump made in 2018, is subject to the approval of the U.S. Securities and Exchange Commission, the president said on his social media site Truth Social, adding that it would cut costs and discourage shortsightedness. "This will save money, and allow managers to focus on properly running their companies," he said. Currently, the SEC requires corporations to report their financial statements every 90 days. Half-yearly reporting would mark a huge change in disclosure requirements and put the U.S. in line with the U.K. and several countries in the European Union. The SEC did not immediately respond to a request for comment. The agency in 2018 solicited public comment on possible changes but ultimately left the current regime in place.

In its regulatory agenda published earlier this month, the SEC revealed that it was considering unspecified changes to "rationalize" company disclosures, providing a possible avenue for the agency to make changes to quarterly reports. Trump's call puts him squarely on one side of a persistent tension between the desires of companies, on one hand, to lessen the burdens of frequent market updates, and investor demands for information on the other.

Some investors have cautioned that waiting longer for financial information would mean less transparency and increased market volatility, making U.S. stocks less attractive, although several on Monday said they supported the idea. Transparency advocates also say it could give companies greater opportunity to hide or delay the disclosure of bad news. "From the perspective of better capital allocation by public companies, the focus on meeting quarterly earnings projections can lead to decisions based on short-term implications, when we would prefer management keep their eye on the long-term ball," Burns McKinney, managing director and portfolio manager at NFJ Investment Group, Dallas, said in an email.

Investors argue that one of the reasons U.S. stocks trade at a premium to equities elsewhere is due to greater financial reporting requirements. The U.S. benchmark S&P 500 index is trading at 24.3 times earnings estimates for the next 12 months, compared to 15.28 times for Europe's STOXX 600, according to data compiled by LSEG. M. Todd Henderson, a law professor at the University of Chicago and an expert on securities regulation, said he expected many companies would continue to feed investor appetite for quarterly disclosures even if the SEC ceased requiring this.

"Overwhelmingly the practice would stay just as it is," he said. "That companies' behaviors are wildly distorted by short-termism is certainly true in some cases but it's not a system-wide phenomenon." Companies listed in the U.S. did not always report their financial results on a quarterly basis. The U.S. regulator mandated the shift from semiannual to quarterly reporting in 1970. In 2018, top corporate bosses Jamie Dimon and Warren Buffett argued in a Wall Street Journal op-ed that short-termism was harming the U.S. economy. The U.S. Chamber of Commerce and Business Roundtable, which represent major corporations and their executives, have in the past called for companies to move away from quarterly earnings guidance, saying it caused companies to take their eyes off long-term goals and was thus a disservice to investors.

The Council of Institutional Investors, which represents retirement savings funds, told the SEC in 2019 that the current system lets investors make timely decisions about companies' progress toward their goals. Jill Fisch, a professor at University of Pennsylvania law school and an expert in securities regulation, said making investors wait to learn of economically significant changes in a company's performance could make markets less efficient.

"Our capital markets are the gold standard in the world for their efficiency and transparency," she said. "I don't know that we want to be emulating markets that people view as less attractive."

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)