Trump calls for end to quarterly reporting

Donald Trump has called for US companies to issue financial reports just twice a year rather than four times.

The US President said he has asked the Securities and Exchange Commission to consider altering rules requiring firms to report every quarter.

The move would improve “flexibility and save money”, Mr Trump said.

Some analysts have criticised the idea, which they say would “keep investors in the dark for longer”.

Mr Trump tweeted: “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 US. ‘Stop quarterly reporting & go to a six month system,’ said one”, he tweeted.

President Trump said he had “asked the SEC to study” such a move.

Analysts said the idea of having companies report less frequently was not new, with some suggesting it could make markets less transparent and more volatile when financial data is released after such a long period.

“If you reduce transparency, including the frequency of reporting, it is thus likely to increase uncertainty, which is the enemy of investors,” said Robert Phipps, a director at Per Sterling Capital Management.

Stan Shipley at Evercore ISI said: “[If] you give investors less information on what’s going on, there’s a risk of injecting volatility in your stock price because investors are not guided the right way.

“You’re more likely to surprise investors when you’re reporting just twice a year instead of quarterly.”

However, other analysts said reducing the frequency of financial reporting to twice a year could potentially reduce “short-termism” in listed companies’ strategies.

“The difficulty in making better long-term decisions away from a quarterly reporting cycle certainly stands out as being beneficial,” said Art Hogan at investment bank B. Riley FBR.

Randy Frederick at Charles Schwab argued that such a major change for both companies and traders would be “like trying to turn around the Queen Mary in a swimming pool”.

“This is not something he can change with an executive order,” he added.

The SEC requires listed US companies to issue quarterly and annual financial reports to keep investors informed about their financial position.

The Trump administration wants to cut red tape that it says is responsible for a 50% drop in companies coming to market over the past two decades, including relaxing some of the disclosure and compliance requirements for listed companies and those looking to go public.

In a report published by the US Treasury last year, the administration outlined policies it hoped would revitalise listings – but did not go as far as suggesting quarterly reporting requirements be scrapped.

The SEC was not immediately available for comment.