SEC "prioritizing" Trump bid to change public company reporting rules
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President Trump proposed on Monday that U.S. public companies report earnings every six months instead of quarterly.
Why it matters: Moving to a six-month schedule could significantly change corporate transparency, reporting practices, and how Wall Street values public companies.
Driving the news: Trump posted on Truth Social Monday that changing the cadence would "save money, and allow managers to focus on properly running their companies."
- "Did you ever hear the statement that, 'China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis???' Not good!!!"
- At Trump's request, Securities and Exchange Commission chair Paul Atkins "is prioritizing this proposal to further eliminate unnecessary regulatory burdens on companies," an SEC spokesperson told Axios.
Here's what to know:
What public companies have to disclose
State of play: Public companies report their earnings every 90 days through 10-Q filings.
- The SEC has required quarterly reporting since 1970.
- Debates over whether quarterly reporting is the best cadence have come up before, including during Trump's first term.
Regulatory requirements force companies to detail the nitty gritty of their finances to shareholders and the public.
- At the end of a quarter, companies have 45 days to produce a report.
- During "earnings season," investors and analysts often examine these reports, giving them the opportunity to assess a company's stock.
Private companies are not required to disclose this information.
The debate over whether less frequent reports save money
Zoom out: Some of America's top business leaders have called for an end to quarterly reporting before.
- Proponents argue that quarterly reports make companies focus too much on short-term performance, hampering long-term planning.
- Given regulatory requirements, gathering reports quarterly versus semi-annually also presents more expenses for companies.
What they're saying: Adena Friedman, chair and chief executive at Nasdaq, said on LinkedIn that her company supports Trump's bid, and that an end to quarterly reports would minimize the "friction, burden and costs associated with being a public company."
The other side: Experts say simply taking away a regular reporting obligation isn't necessarily the solution.
- "Trying to get companies less hyper focused on the short-term quarterly hamster wheel would be good, but it's far from clear that reducing investor disclosure to semi-annual reporting would do that," Dennis Kelleher, CEO of advocacy group Better Markets, told Axios.
- "The real solution would be getting Boards of Directors to incentivize and then support corporate executives to focus more on the long term and less on the short term."
By the numbers: Yong Yu, a professor of accounting at the University of Texas at Austin, found that more frequent reporting helps investors.
- More information helps investors better predict future earnings, Yu found.
The likelihood of a change to reports
When Trump called for a similar change in 2018, the SEC explored a change but never committed to one, running out of time before Trump left office.
- Today, Trump has time on his side.
What we're watching: Changing the reporting cadence would involve a multistep process overseen by regulators before it could go into effect.
Editor's note: This story has been updated with SEC comment.
