Trump Pushes to Eliminate Quarterly Earnings Reports

Trump Proposes Shift from Quarterly to Semiannual Earnings Reports

President Donald Trump recently introduced a new idea on his Truth Social platform, suggesting that companies could stop issuing earnings reports on a quarterly basis and instead switch to semiannual reporting. According to Trump, this change would require approval from the Securities and Exchange Commission (SEC) and would "save money, and allow managers to focus on properly running their companies."

Trump highlighted what he described as a common sentiment: “Did you ever hear the statement that, ‘China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis??? Not good!!!’” This comparison between U.S. and Chinese business practices has sparked debate over the effectiveness of current financial reporting standards.

During his first term in office, Trump had previously asked the SEC to examine the issue of quarterly reporting. However, no official recommendations emerged from that inquiry. The concept of changing how companies report earnings is not new. In 2018, Warren Buffett of Berkshire Hathaway and Jamie Dimon of JPMorgan Chase wrote an op-ed in The Wall Street Journal advocating for the elimination of quarterly guidance, though not the earnings reports themselves.

Their argument centered on the idea that focusing on short-term profits often undermines long-term strategy, growth, and sustainability. While current regulations mandate quarterly earnings reports, providing forecasts is voluntary. Changes to these rules could come from either the SEC or Congress.

From a logistical standpoint, altering the reporting frequency would not require congressional action. Instead, it would need a majority vote at the SEC, where Republicans currently hold a 3-1 voting majority. With one open seat, the process could take anywhere from six to 12 months, according to Sarah Bianchi, chief strategist of international political affairs and public policy at Evercore ISI.

Bianchi noted that while previous administrations have influenced the SEC’s policies to some extent, the agency has historically maintained a degree of independence. SEC Chair Paul Atkins has not publicly commented on the issue.

If the push to reconsider quarterly reporting gains momentum, it could lead to broader discussions about how companies communicate with investors. This could have significant implications for public markets.

Supporters of the current system argue that quarterly reporting provides investors with timely information and ensures transparency. Art Hogan, chief market strategist at B. Riley Wealth Management, believes the benefits of quarterly reporting outweigh the drawbacks.

“Having to wait six months for official results would cause more difficulties than it would add benefits,” Hogan said. He emphasized that while some executives have faced criticism for misleading earnings reports, the use of generally accepted accounting principles (GAAP) helps maintain standardization and reliability.

Despite Trump's comments about China, it's worth noting that Chinese companies also have similar reporting requirements, if not stricter ones. They are required to file quarterly earnings reports along with semiannual and annual reports. In contrast, companies listed on the Hong Kong exchange only report every six months.

Trump’s proposal aligns more closely with practices in the U.K. and European Union, where companies are required to file semiannually but can choose to issue quarterly reports. However, Hogan argues that such comparisons are not entirely valid.

“How many companies in the European markets have trillion-dollar market caps and are growing revenues at 60% a year or have gross margins that are north of 50%?” he questioned. “The investor is better suited to having more information than less or more frequent information.”

Earlier this year, Norway’s sovereign wealth fund proposed shifting to semiannual reporting, citing the need for companies to focus on long-term goals. Similarly, the Long-Term Stock Exchange trading platform has supported less frequent reporting.

The White House has not provided further comment on Trump’s post, and the SEC has not responded to requests for clarification. As the discussion continues, the future of earnings reporting remains uncertain.