President Trump has voiced his intention to eliminate the long-standing practice of quarterly earnings reports in U.S. financial markets, a requirement established by the Securities and Exchange Commission (SEC) since 1970. Instead, he proposes that companies should disclose their financial data every six months. This change would mark a significant departure from a protocol that has been in place for over 55 years.
Trump argues that extending the reporting period would allow companies to save money and focus more on effective management. In a social media post on Monday, he emphasized the disadvantages of the current quarterly reporting system, stating it compels companies to operate on a short-term basis rather than fostering long-term growth. He referenced the “50 to 100 year view” that companies in China adopt compared to the focus on quarterly results in the U.S., suggesting that such an approach is detrimental.
The idea of switching to semi-annual reporting isn’t entirely novel; it has been a topic of discussion among academic and business circles for several years. During his first term, Trump had previously urged the SEC to consider the switch but saw no tangible changes at that time.
Market analysts are beginning to assess the feasibility of Trump’s proposal. Jaret Seiberg from TD Cowen stated that there is a 60% probability the SEC might facilitate the shift from quarterly to semi-annual reporting. The analyst suggested that SEC Chairman Paul Atkins may find the change politically advantageous, possibly increasing the likelihood of implementation.
This renewed discussion comes at a time when the corporate sector is increasingly advocating for regulatory changes. For example, the Long Term Stock Exchange, which focuses on companies with long-term objectives, has stated its intention to petition the SEC to eliminate the quarterly reporting requirement. Its founder, Eric Ries, has criticized traditional financial metrics that prioritize short-term benefits, arguing that they hinder sustainable business practices.
Proponents of six-month reporting argue that the current quarterly framework imposes excessive costs and time commitments on companies. They believe this practice discourages potential candidates from going public, as executives tend to concentrate on meeting short-term earnings targets at the expense of long-term strategies.
However, opponents warn that reducing the frequency of financial disclosures could leave investors with critical gaps in information. Sam Kampner, the founder of SalesCraft AI, articulated concerns on social media, cautioning that less frequent updates would impair investors’ ability to make informed decisions.
A study published in 2018 by the Harvard Business Review examined a similar shift in the U.K., where the requirement for quarterly reporting was abandoned in 2014. The findings indicated a layered complexity; while moving away from quarterly reports didn’t eliminate corporate short-termism or earnings management, it also did not lead to a complete lack of transparency for investors.
If the change proceeds, it will likely take at least six months for the SEC to formulate a proposal grounded in economic data. Analysts like Seiberg suggest that signs of momentum could emerge if Chairman Atkins begins discussing the issue in public forums and if it appears on the agenda for the SEC’s Investor Advisory Committee.
