Trump to SEC: Consider ending quarterly reports

President Donald Trump

Nooyi, who led the food and beverage giant during a turbulent time in the industry, is a rarity as a woman and a minority leading a Fortune 500 company. In a statement, Nooyi said she and other CEOs "have been discussing how to better orient corporations to have a more long-term view".

But critics contend that new reporting requirements may not spur meaningful change given the deluge of company information available on social media. "We start preparing three weeks in advance every quarter, essentially taking nearly a third of executives' time each quarter", said Bryan Sheffield, chief executive of shale oil producer Parsley Energy Inc. "So we're looking at that very, very seriously", Trump said as he was boarding Marine One on the White House lawn Friday morning.

The SEC's chairman said the agency already is studying the issue.

Half-yearly reporting would mark a huge change in US disclosure requirements and put it in line with European Union and United Kingdom rules.

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. That can pressure executives to engage in reckless practices to hit quarterly targets or even to manipulate earnings reports.

The Council of Institutional Investors (CII) believes that public companies should continue to report quarterly on their financial performance.


The SEC in 2016 considered the idea of cutting the quarterly requirement, and signaled that it might do so.

Yesterday, Clayton said in a statement that many investors and market participants share the president's perspective "on the importance of long-term investing" and that the SEC's corporate finance division is continuing to study company reporting requirements.

"Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace", said Amy Borrus, CII's deputy director. A lot can change in a three-to six-month period, especially with all the disruption in technology.

"It is not the fact that you report quarterly that is the problem; it's a bad management team", he said.

Some believe that executives are making decisions based on short-term thinking to satisfy the market at the expense of the long-term viability of their companies. Well-known chief executives, including JPMorgan Chase & Co's Jamie Dimon, Berkshire Hathaway Inc's Warren Buffett and BlackRock Inc's Larry Fink have raised concerns about the focus placed on earnings reports and guidance. Japan, though, moved in the opposite direction, gradually forcing companies to shift from semi-annual to quarterly reporting during the 2000s. "Transparency about financial and operating results is an essential aspect of US public markets", they wrote in a Wall Street Journal op-ed in June. 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.

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