President Trump Is Interested in a Major Shakeup for Corporate Earnings Reports

President Trump Is Interested in a Major Shakeup for Corporate Earnings Reports

Regulators can conduct studies of their own volition, or will do so at the request of Congress, the president, or the public. But moving away from reporting earnings every three months would be a much more dramatic change that would nearly certainly trigger resistance from shareholders who want transparency from the companies they invest in.

In a statement Friday, Nooyi said her comments were part of a broader conversation about how to better focus companies toward long-term goals. "In the end, all companies have to balance short-term and long-term performance", Nooyi said.

SEC Chairman Jay Clayton, a Trump nominee, has said increasing the number of public companies and initial public offerings are among his top priorities.

Eliminating the quarterly reporting requirements could also lead investors to fill the information vacuum by relying more heavily on rumors and off-the-cuff remarks made by company executives, corporate governance experts say.

U.S. President Donald Trump said on Friday he had asked the U.S. Securities and Exchange Commission to study the impact of allowing companies to file reports with the financial regulator every six months instead of every quarter. As an independent agency, the SEC enjoys some level of independence from the White House.

Even if the SEC concluded the change was a good idea, companies would likely stick with the current regime to avoid investor backlash, said Ed Yardeni, founder and chief investment strategist at Yardeni Research.

The SEC consists of five commissioners appointed by the president, although there now are only four in place, three named by Trump.

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It's a move that would benefit businesses and workers, the president said.

Business groups including the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and exchange operator Nasdaq have been lobbying hard over the past year for lawmakers and the SEC to relax listing rules, warning that the decline in listings hurts jobs and pension funds. "She said, two times a year reporting, not quarterly".

Trump recently hosted company leaders at his private golf club in Bedminster, New Jersey, including the heads of Apple Inc, Fiat Chrysler Automobiles NV, Boeing Co, FedEx Corp, and Honeywell International Inc.

In 1998, there were around 7,500 listed companies in the United States, compared with around 4,300 in 2017, according to data compiled by the World Bank. Being a public company subjects Tesla "to wild swings in our stock price" and makes it a target of investors betting the company's stock price will fall, he wrote in an email to employees last week.

Quarterly financial reports are a staple of US corporate practice. But quarterly reports on results are distinct from the so-called earnings guidance that company executives provide as a forecast.

In theory, this information helps investors make informed decisions about the future success of a company.

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