FILE - In this Aug. 13, 2018 file photo, President Donald Trump speaks before signing a $716 billion defense policy bill named for Sen. John McCain in Fort Drum, N.Y. Trump says he’s asking federal regulators to look into the effectiveness of the quarterly financial reports that publicly traded companies are required to file. In a tweet early Friday, Aug. 17, Trump said that after speaking with “some of the world’s top business leaders,” he’s asked the U.S. Securities and Exchange Commission to determine whether shifting to a six-month reporting regimen would make more sense. (AP Photo/Hans Pennink, File)

Trump asks SEC to consider ending required quarterly reports

Will help business leaders focus on long-term objectives

August 17, 2018 - 12:06 pm
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WASHINGTON (AP) — President Donald Trump says he's asking federal regulators to consider scrapping the requirement for public companies to report quarterly results, after business executives told him twice-yearly reports would make better economic sense.

In a tweet early Friday, Trump said that after speaking with several top business leaders, he's asking the Securities and Exchange Commission to determine whether shifting to a six-month reporting requirement would help companies grow faster and create more jobs.

Trump later told reporters the idea was especially urged on him by Indra Nooyi, a prominent business figure who is CEO of PepsiCo, who is stepping down in October.

"So we're looking at this very, very seriously," Trump said. "We're looking at two times a year rather than four times a year."

The SEC requires public companies to report profit, revenue and other figures publicly every three months. The requirement dates to the establishment of the agency in the 1930s Great Depression, as a way to give investors confidence in company information.

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. That can pressure executives to engage in reckless practices to hit quarterly targets or even to manipulate earnings reports. But quarterly reports on results are distinct from the so-called earnings guidance that company executives provide as a forecast.

Scrapping the quarterly requirement "is a solution in search of a problem," said Charles Elson, a professor and director of the University of Delaware's Weinberg Center for Corporate Governance. "Earnings manipulation can take place whether quarterly or every six months."

Quarterly reports are "early warning signs of other bigger problems," Elson said.

Business executives pressing for less frequent financial reporting maintain that the costs of putting together quarterly as well as annual reports are burdensome.

SEC spokesmen didn't immediately respond to a request for comment.

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