Trump mulls major changes to earnings report requirements
“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. “‘Stop quarterly reporting & go to a six month system… that would allow greater flexibility & save money. I have asked the SEC to study!”
While several other countries already require earnings reports to be revealed only every six months, listed US companies must do so every three.
Among these countries, the UK stands out as a case study. Companies in the European nation are not required to report every quarter – but 90% of them still do so.
JPMorgan‘s Jamie Dimon and Berkshire Hathaway‘s Warren Buffet posted a a joint letter published in The Wall Street Journal in June. In it, they argue against the continuity of quarterly reports, citing an ongoing “short-termism“ in companies that abide by them.
They believe that quarterly earnings report lead to companies adopting short-term strategies for financial performances that please investors at the expense of longer-term strategy and investment.
“We are encouraging all public companies to consider moving away from providing quarterly earnings-per-share guidance,” Buffett and Dimon wrote in the letter, co-signed by prominent CEO group The Business Roundtable.
“In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability.”