Financial Reporting

Trump Suggests Switch to Half-Year Reporting

“I'd like to see twice [a year]," he says after announcing he has asked the SEC to study changing the quarterly reporting requirement.
Matthew HellerAugust 17, 2018
Trump Suggests Switch to Half-Year Reporting

President Trump suggested on Friday that public companies should file financial reports every six months instead of quarterly but immediately ran into pushback from investors and others.

Trump tweeted that after speaking with “some of the world’s top business leaders,” he had asked the U.S. Securities and Exchange Commission to look into a change in its reporting requirements.

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In a statement to reporters, he later said outgoing Pepsi CEO Indra Nooyi had brought a six-month reporting schedule up to him. “I’d like to see twice but we’re going to see,” he said. “So we’re looking at that very very curiously, we’re looking at twice a year instead of four times a year.”

As Reuters reports, “Half-yearly reporting would mark a huge change in U.S. disclosure requirements and put them in line with European Union and United Kingdom rules.” The current system was mandated by the Securities Exchange Act of 1934 to provide more transparency to investors in the wake of the 1929 stock market crash.

Businesses have long complained that quarterly reports require company executives to focus too much on the short term.

“We have to move our public markets away from a quarterly fixation on short-term results and restore a long-term perspective to business and capitalism,” Sabastian V. Niles, a partner at the law firm of Wachtell, Lipton, Rosen & Katz, said in a statement.

But investors reacted negatively to the president’s move, arguing that quarterly disclosures are essential for investment decisions and supported richer stock valuations.

“It’s a cockamamie idea. For starters, what’s the difference between six and three months? … Either way we’re talking about a very short-term period,” Ed Yardeni, founder and chief investment strategist at Yardeni Research, told Reuters.

The SEC has been seeking to relax rules for issuers but scrapping quarterly reporting is not on its near-term agenda, according to public records.

“If public companies moved from quarterly to semi-annual reporting, that would deprive investors of timely information and dramatically increase the potential for insider trading,” said Robert Pozen, senior lecturer at the MIT Sloan School of Management.

Photo: Michael Vadon, via Wikimedia Commons, CC BY-SA 2.0