President Donald Trump floated the idea Monday of companies no longer providing earnings report on a quarterly basis and switching to semiannual instead.
In a Truth Social post, Trump said the idea is “subject to SEC approval” and 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!!!'” Trump said.
The wisdom of quarterly reports has come under question before. In a 2018 op-ed piece for The Wall Street Journal, Berkshire Hathaway’s Warren Buffett and JPMorgan Chase CEO Jamie Dimon advocated doing away with quarterly guidance, though not earnings reports.
“In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability,” the pair wrote.
Current regulations require companies to report earnings on a quarterly basis, though providing forecasts is voluntary. The rules can be changed either from the Securities and Exchange Commission or could be altered by Congress.
Supporters of the current system say it provides investors with timely opportunity as well as transparency about public companies.
While executives have come under some criticism for reporting misleading earnings, the use of generally accepted accounting principles — GAAP — has helped provide guardrails that ensure standardization. For that reason, U.S. reporting is considered among the most transparent and reliable in the world.
Despite Trump’s comments about China, companies there have reporting requirements that are similar to the U.S. if not more stringent. Chinese companies must file quarterly earnings reports as well as semiannual and annual reports.
Companies listed on the Hong Kong exchange, however, only report every six months.
Trump’s proposal would be more in line with practices in the U.K. and European Union, where companies are required to file semiannually but can issue quarterly reports if they choose.
Earlier this year, Norway’s sovereign wealth fund proposed switching to semiannual reporting, reasoning that lengthening the time frame would allow companies to focus on the longer term.
The White House declined further comment on Trump’s post. CNBC has reached out to the SEC for comment.
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