Trump Proposes Biannual Earnings Reports: Investor Reactions

Trump Proposes Semiannual Earnings Reports for U.S. Companies

President Donald Trump has reignited a debate over the frequency of financial reporting by U.S. companies, suggesting that publicly traded firms should switch from quarterly to semiannual earnings reports. This idea, which he promoted on his Truth Social platform, argues that such a shift would allow business leaders to focus more on long-term strategies rather than meeting short-term performance targets.

Trump emphasized that the proposal is subject to approval by the Securities and Exchange Commission (SEC). He stated, “Companies and corporations should no longer be forced to report on a quarterly basis, but rather to report on a six-month basis.” According to him, this change could reduce costs and enable executives to better manage their businesses without the pressure of frequent reporting deadlines.

He also highlighted a contrast between the U.S. and China, claiming that the latter operates with a 50- to 100-year vision for company management, while the U.S. focuses on quarterly results. “Not good!!” he remarked, underscoring his belief that the current system is flawed.

Long-Term Stock Exchange Supports the Proposal

One of the key supporters of semiannual reporting is the Long-Term Stock Exchange (LTSE), an alternative U.S. exchange designed to promote long-term business goals. The LTSE plans to submit a petition to the SEC in the coming weeks, seeking to implement six-month reporting requirements. This move would initiate a public comment period and eventually lead to an SEC decision.

Under the proposed changes, companies would still have the option to issue quarterly reports if they choose. However, the LTSE’s CEO, Bill Harts, argues that quarterly reporting imposes a burdensome process that involves many employees and often fails to deliver meaningful insights for investors. He pointed out that some startups avoid going public due to these stringent reporting obligations.

Harts added that there is academic support for the idea that semiannual reports can lead to more informed and accurate disclosures. “No one should confuse frequency of reports with the quality of reports,” he said, emphasizing that the focus should be on the value of the information provided, not how often it is shared.

Criticisms and Concerns

Despite the support from the LTSE, the proposal has faced significant pushback from market analysts and investors. David Russell, Global Head of Market Strategy at TradeStation, warned that reducing the frequency of financial reports could lower transparency and make it harder for individual investors to make informed decisions.

“Less reporting can also favor insiders and increase the risk of shocks and volatility when key news hits,” Russell said. He argued that the current quarterly reporting system ensures a level playing field for all market participants, providing regular updates that help investors track company performance.

On social media, opinions on the proposal were mixed. Some users expressed concerns about reduced oversight and the potential for companies to hide unfavorable data. One user, Robert Okoye, noted that switching to six-month reporting might cut costs but could also create more room for manipulation and delayed accountability.

Others, however, supported Trump’s vision. RadnorCapital suggested that the move could reduce the pressure to meet short-term targets and encourage a more sustainable approach to business planning.

Historical Context and Previous Attempts

This is not the first time Trump has floated the idea of semiannual reporting. In 2018, he made a similar proposal, but it did not gain traction. At the time, some major corporate executives voiced concerns about the impact of quarterly reporting on business strategy.

In 2018, the Brookings Institution published research questioning the benefits of six-month reports, citing a study by the CFA Institute Research Foundation. The study found that when the United Kingdom shifted from semiannual to quarterly reporting in 2007, there was no significant drop in capital or research spending. Later, in 2013, the UK reverted to semiannual reporting, with no notable increase in investment in capital or research.

Similarly, in Europe, financial reporting moved to a semiannual basis in 2013, reflecting a broader trend toward balancing transparency with long-term business goals.

Ongoing Debate and Future Outlook

As the discussion continues, the question remains whether semiannual reporting would truly benefit companies and investors or if it would introduce new challenges. While some see it as a way to reduce administrative burdens and encourage long-term thinking, others fear it could compromise transparency and investor confidence.

The outcome of the SEC’s review of the LTSE’s petition will be closely watched, as it could set a precedent for future financial reporting standards in the U.S. For now, the debate highlights the ongoing tension between short-term performance metrics and long-term strategic planning in the world of finance.