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 regulators take up his call, News.Az reports citing Reuters.
"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 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 companies, on one hand, that seek 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.
Adena Friedman, chair and chief executive at Nasdaq, said in a post on LinkedIn that her company strongly supported allowing companies to choose to report less frequently, as this would minimize the "friction, burden and costs" of companies listed on Wall St."
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 (.SPX) opens new tab is trading at 24.3 times earnings estimates for the next 12 months, compared to 15.28 times for Europe's STOXX 600 (.STOXX) opens new tab, according to data compiled by LSEG.
