President Donald Trump on Friday tweeted that the USA could abandon quarterly financial reporting.
U.S. President Donald Trump on Friday said meetings with corporate executives had prompted him to ask the U.S. Securities and Exchange Commission (SEC) to study letting public companies file financial reports every six months instead of every quarter. "Many investors and market participants share this perspective on the importance of long-term investing", he said.
Tesla Inc Chief Executive Elon Musk stunned investors last week by announcing a plan to take the electric carmaker private, a move he says would benefit shareholders by removing short-term pressures associated with being a public company. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year". "Either way we're talking about a very short-term period", Yardeni added.
"The president has highlighted a key consideration for American companies and, importantly, American investors and their families - encouraging long-term investment in our country", Clayton said. Others said that the prospect of fewer financial reports could exacerbate price swings around earnings or fuel insider trading.
In a statement on Friday afternoon, SEC Chairman Jay Clayton said Trump has raised a "key consideration" for US companies and that the agency's "Division of Corporation Finance continues to study public company reporting requirements, including the frequency of reporting".
She said cutting the required frequency of financial reports was one of several suggestions that she made, with the aim of moving companies toward focusing more on long-term goals rather than immediate results.
"They are more likely to react to other types of information and more likely to overreact", said Jill E. Fisch, a co-director of the Institute for Law and Economics at the University of Pennsylvania.
Some investors on Friday said quarterly disclosures were essential to making informed investment decisions and supported richer US valuations, and that shares could become more volatile if companies report only twice yearly. Japan, though, moved in the opposite direction, gradually forcing companies to shift from semi-annual to quarterly reporting during the 2000s.
Later, reporters asked the president to give more insight into his tweet.
The change, if enacted, would have the USA following other countries in reducing the frequency of reporting requirements. "As an investor, I find it troubling".
"It's cockamamie idea. For starters, what's the difference between six and three months?".
Meanwhile, Svezia noted, less frequent updates and disclosures would likely be a source of frustration for investors. "Jeff Bezos has proven you can report quarterly numbers and think long-term". The SEC requires public companies to report profit, revenue and other figures publicly every three months. "My comments were made in that broader context, and included a suggestion to explore the harmonisation of the European system and the U.S. system of financial reporting".