SEC Supports Trump’s Plan to Change Quarterly Earnings Reports to Semiannual

The Securities and Exchange Commission (SEC) is considering a rule change that would transition corporate earnings reporting from a quarterly to a semiannual schedule. Paul Atkins, the head of the Wall Street regulatory watchdog, expressed support for President Donald Trump’s proposal for this adjustment. Trump suggested in a recent post on Truth Social that companies should move away from reporting every three months and instead adopt a six-month disclosure requirement. Trump believes that this change would be cost-effective and allow managers to focus more on effectively running their companies.

The current law regarding quarterly reporting was established in 1970, following the traditional semiannual reporting practice. If the proposed rule change is approved, companies would have the flexibility to choose between quarterly or semiannual reporting. Atkins emphasized that it would be up to the market to determine the appropriate reporting frequency that best serves the interests of shareholders and public companies.

When asked about the potential impact of the change on retail investors, Atkins highlighted the various tools available to disseminate information about businesses, stocks, and the economy. He pointed out that investors, both professional and retail, primarily rely on earnings calls with CEOs and CFOs for information. Atkins stressed the importance of evaluating the different methods through which people obtain information, ensuring that it aligns with the intended purpose.

As discussions surrounding this issue have been ongoing for several years, experts have raised concerns that quarterly reporting fosters short-term thinking. During his previous term in office, Trump indicated that global business leaders supported a switch to a semiannual reporting system, believing it would improve business conditions in the U.S. Following Trump’s comments, former SEC Chairman Jay Clayton launched a review that concluded quarterly reporting enhances transparency and lowers capital costs for companies seeking funding. However, it was noted that issuing guidance could promote short-term decision-making among executives.

Anupam Satyasheel, CEO of Occams Advisory, praised the proposed shift to semiannual reporting, describing it as a positive step that will alleviate the significant pressure placed on companies by quarterly reporting. Satyasheel believes that semiannual reporting will reduce the short-term focus and be well-received by public companies. Despite the potential benefits of this change, there are concerns raised by Marc Fandetti, a portfolio strategist at Armstrong Advisory Group. Fandetti warned that reducing reporting frequency could lead to decreased transparency, impacting investors and market efficiency.

If approved, the United States would align with several other countries, such as China, the UK, Australia, and Japan, that require publicly listed companies to report on a semiannual basis. The proposed shift from quarterly to semiannual reporting aims to strike a balance between maintaining transparency and reducing the burden on companies, allowing them to focus on long-term strategic goals.