U.S. President Donald Trump has asked the U.S. Securities and Exchange Commission (SEC) to study the feasibility of ending quarterly reporting for U.S. businesses to ease regulations and spur greater economic growth.
There will now be an investigation into the impact of this policy idea by the Securities and Exchange Commission (SEC), the president added. By tweeting that the switch would give companies more flexibility and reduce costs, Trump waded into a long-running debate on how often public companies should report.
But executives and other investors said Trump's argument made sense because it would cut costs of compiling and filing results and remove short-term distractions for those running companies.
The SEC is an independent commission-led agency, and the president can not force it to implement rule changes.
"In speaking with some of the world's top business leaders I asked what it is that would make business (jobs) even better in the U.S", Trump tweeted.More news: Tyson Fury confirms Deontay Wilder bout after second comeback win
The SEC requires listed United States companies to issue quarterly and annual financial reports to keep investors informed about their financial position. "In the end, all companies have to balance short-term and long-term performance", Nooyi said. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year".
The proposal would mean rethinking a cornerstone of the country's accounting system since the Great Depression: Every three months, publicly traded companies must offer a detailed financial picture - including their revenue and profits - to shareholders.
Under Trump appointee chairman Jay Clayton, the SEC has taken steps to relax rules for issuers, including allowing firms going public to file information confidentially, and is now discussing relaxing some other compliance rules.
It's a move that would benefit businesses and workers, the president said. The report compares company earnings with that of the previous quarter. One of the reasons Tesla CEO Elon Musk wants to take his company private, he told his employees last week, was the way quarterly reports distort decisions at the company. Japan, though, moved in the opposite direction, gradually forcing companies to shift from semi-annual to quarterly reporting during the 2000s.
And he said, the SEC already had implemented some regulatory changes and continued to consider others that "encourage long-term capital formation while preserving and, in many instances, enhancing key investor protections". I find it very rich that he's proposing this with some veil that it's going to help companies think long-term. Two influential figures, JPMorgan Chase CEO Jamie Dimon and billionaire investor Warren Buffett, recently urged together that public companies either reduce or eliminate quarterly earnings guidance.
Druckenmiller noted that investors like to know what's going on with the companies they invest in. "Earnings manipulation can take place whether quarterly or every six months".