In a move that has drawn attention from corporate leaders and investors alike, former President Donald Trump suggested a significant change to the financial reporting requirements for U.S. companies. In a post on his social media platform Truth Social, Trump proposed that companies should only be obligated to disclose their financial results biannually, rather than on the traditional quarterly basis that currently dominates financial calendars.
“Subject to SEC Approval, Companies and Corporations should no longer be forced to ‘Report’ on a quarterly basis (Quarterly Reporting!), but rather to Report on a ‘Six (6) Month Basis,’” Trump stated, underscoring the potential cost-saving benefits associated with this shift. He argued that reducing the frequency of financial reporting would free up management to focus on the day-to-day operations of their businesses. Trump also emphasized a comparison to China’s long-term strategic management perspective, stating, “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!!!”
Current regulations, as outlined by the Securities Exchange Act of 1934, empower the Securities and Exchange Commission (SEC) to mandate quarterly reporting from publicly listed companies in the United States. This contrasts with many European exchanges, which require financial disclosures only twice a year. The biannual reporting model that Trump advocates aligns more closely with international standards prevalent outside the U.S.
Trump’s own history with SEC regulations adds an intriguing dimension to his proposal. In 2002, his company, Trump Hotels & Casino Resorts, reached a settlement with the SEC regarding a financial report that highlighted discrepancies in its earnings statement. The controversy revolved around “adjusted” earnings figures that included one-time gains while excluding significant charges, raising longstanding debates within the investment community regarding the value of Generally Accepted Accounting Principles (GAAP) versus non-GAAP reporting.
Warren Buffett, the renowned CEO of Berkshire Hathaway, has often criticized the practice of using adjusted financials, which can present a skewed view of a company’s financial health. In his recent letters to shareholders, Buffett expressed concern that even the operating earnings figures, which he favored, can be easily manipulated by management. He cautioned that such practices are frequently overlooked or accepted by analysts and the media alike.
As discussions around this proposed regulatory change gain traction, financial analysts and corporate executives are weighing in on the potential impacts. Critics of quarterly reporting argue that it fosters shortsightedness among company leaders, while proponents of maintaining the status quo contend that regular updates provide essential transparency for investors.
The implications of this approach could be significant, leading to a broader reassessment of how U.S. corporations are managed and how they communicate their financial health to stakeholders. Whether or not this idea gains ground in regulatory discussions remains to be seen, but it has certainly sparked debate within the business community.
