U.S. Treasury Secretary Scott Bessent has expressed optimism regarding President Donald Trump’s recent proposal to allow companies to report earnings semiannually instead of quarterly. In a statement to CNBC, Bessent remarked that this change could benefit investors by enabling company executives to concentrate on long-term objectives instead of short-term financial metrics, which often dominate decision-making processes.
Trump’s advocacy for this idea was highlighted in a post on Truth Social, where he pointed out that both U.K. and U.S. public markets are experiencing stagnation and suggested that reducing the frequency of earnings reporting might stimulate corporate engagement and reduce costs for public companies, all without compromising investor interests.
Over recent years, a significant trend has emerged wherein many companies prefer to remain privately held rather than listing publicly. This shift can be attributed to the increasing scrutiny and compliance costs associated with quarterly reporting. In fact, the number of publicly listed companies in the U.S. plummeted from more than 7,000 in 1996 to under 4,000 in 2020.
Trump emphasized that moving to semiannual reporting would align U.S. practices with those in several foreign jurisdictions. He highlighted the contrasting time horizon for management styles, illustrating how countries like China maintain a long-term outlook on business management while U.S. companies often operate on a quarterly basis.
While companies in China do report quarterly, those on the Hong Kong exchange provide reports every six months. In the U.K. and European Union, businesses are also permitted to report semiannually, though they can opt to release quarterly reports if they choose.
Despite the potential advantages, some investors have raised concerns over the lack of quarterly reports. The Council of Institutional Investors (CII), representing pension funds invested in stocks, warns that moving to semiannual reporting may not adequately safeguard investor interests, as regular returns provide essential visibility into companies’ financial health.
In addition, foreign companies operating in the U.S. under the foreign private issuer scheme, such as Arm and Spotify, are not obliged to report quarterly but have the option to do so voluntarily. CII has highlighted that the exemptions currently enjoyed by these foreign firms in the U.S. may weaken effective governance practices.
The proposed changes could further enhance the U.S. stock market’s appeal, especially to European companies that have been attracted to U.S. exchanges for the higher valuations and regulatory advantages they offer. A shift away from quarterly reporting might lower compliance burdens for these firms considering relocation.
Legal expert Mike Bienenfeld from law firm Linklaters noted that while this adjustment may not radically change the landscape, it will certainly factor into the decision-making processes of companies contemplating U.S. listings. When questioned about whether this would indeed make the U.S. a more attractive option for European businesses, Bessent humorously remarked, “It’s tough being popular.”
