President Donald Trump on Monday revived a proposal that publicly traded U.S. companies report earnings every six months rather than the current, long-standing requirement for three months, arguing that semiannual reports would let executives better manage their business.
"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," the president posted on his Truth Social account. "This will save money and allow managers to focus on properly running their companies."
Trump added that China has a 50- to 100-year view on company management, while the U.S. runs companies on a quarterly basis. "Not good!!!" Trump said.
One of the advocates for semiannual reports is the Long-Term Stock Exchange, an alternate U.S. exchange focused on long-term objectives. The LTSE plans to petition the SEC in a few weeks seeking six-month reports, CEO Bill Harts told IBD. That will start a process of public comments and ultimately an SEC decision. Under the proposal, companies that wish to make quarterly reports would still be able to.
Quarterly reports, he added, burden companies with a process that requires dozens of people and doesn't necessarily result in better information for investors. Some startups are reluctant to go public because of heavy reporting requirements.
"No one should confuse frequency of reports with the quality of reports," Harts said. With six-month reports, executives would make better-informed public reports, adding that some academic studies back that up.
Long-Term Stock Exchange is a five-year old platform that believes financial markets force businesses to prioritize short-term gains over everything else. The exchange's focus is to reward long-term performance.
Quarterly Reports Vs. Trump's Six-Month Plan
The current SEC requirement for quarterly financial disclosures began in 1970, and it would be a massive change for investors and companies — one not necessarily welcomed.
"Reducing financial reports reduces transparency and information for market participants," David Russell, Global Head of Market Strategy at TradeStation, said in an email to IBD. "Instead of leveling the playing field, this kind of move will make it harder for individual investors to do research and make informed decisions. Less reporting can also favor insiders and increase the risk of shocks and volatility when key news hits."
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On social media, investor opinions varied.
"Switching from quarterly to 6-month reporting might cut costs, but it means less oversight, more room to hide bad numbers, and delayed accountability," said a user described as Robert Okoye on the X social media app.
Others agree with Trump. "Reduces short term focus and the need to 'hit numbers' sometimes at the expense of longer-term interests," a user called RadnorCapital wrote.
Earnings Report Proposal In 2018
Trump made the same proposal in 2018, although it went nowhere.
Executives of some major companies have been critical of quarterly reports. The Brookings Institution in 2018 published research skeptical of six-month reports, quoting a study by the CFA Institute Research Foundation.
In 2007, the U.K. shifted from semiannual financial reports to quarterly reporting. There was no significant decrease in capital or research expenditures, the study found. In 2013, U.K. regulators went back to semiannual reports, and there was still no significant increase in U.K. company spending on capital investment or research.
In Europe, financial reports also moved to a semiannual basis in 2013.
