On a day already agitated by news for companies and investors, the president added to the mix a social media post that casually suggested regulators completely change a fixed element of American corporate life over the past half-century.
In case you missed it: This Monday morning, President Donald Trump revived one of his favorite projects from his first term, stating that listed companies should not be required to report their results every three months, but every six months. This will save money and allow managers to focus on the proper management of their companies, he wrote.
This is not a particularly radical or new idea: most European and British public companies are only required to report every six months. But the proposal comes at a time when Trump has also sought to remake the U.S. economy in his image and likeness and question any data or institution that can tarnish his legacy.
Trump is not the only one calling for a less frequent disclosure schedule.
Some academics and business leaders say that requiring companies to disclose their finances quarterly, as has been done in the United States since 1970, exacerbates the obsession of U.S. companies with pleasing the short-term stock market rather than focusing on long-term value creation.
Trump briefly pushed the idea in 2018, when he tweeted that he had urged the Securities and Exchange Commission (SEC) to “study” the transition to a semi-annual reporting system, although it is unclear whether it materialized.
And, without a doubt, quarterly capitalism has critics across the political spectrum. Hillary Clinton advocated in her presidential campaign for a multi-pronged solution to prompt CEOs to prioritize long-term growth and job stability over short-term gains.
Financials Jamie Dimon and Warren Buffett argued in 2018 that listed companies should reduce or eliminate the practice of estimating future quarterly earnings, which differs slightly from what Trump proposes.
Dimon and Buffett made it clear that their views on profit forecasts should not be misinterpreted as an opposition to quarterly and annual reporting, which they considered essential for the integrity of stock markets. (Companies are not required to provide profit projections, although many do so voluntarily to help manage Wall Street expectations.)
The argument in favour of quarterly reports is that efficient and fair public markets require transparency, no matter how upset it may be for CEOs, who have to pay staff to ensure regulatory compliance, accounting, and public relations around that report four times a year.
Even if you only own a company share, that small stake gives us the right to be aware of what happens behind the scenes regularly.
Eliminating quarterly reports would significantly increase the U.S. stock market risk premium compared to its international peers, wrote George Pearkes, global macro strategist at Bespoke Investment Group, referring to Trump’s proposal, in a Bluesky publication. “This idea is terrible,” he stressed.
No doubt any changes to the reporting schedule would require the approval of the SEC – something that the president of the Trump-appointed agency, Paul Atkins, could easily provide. And would likely take months to implement.
The White House declined to comment beyond Trump’s post on social media.
In an email, an SEC spokesman said that, at Trump’s request, Atkins and the SEC are prioritizing this proposal to further eliminate unnecessary regulatory burdens on businesses.
In short, it’s no secret that Trump cares a lot about the image and doesn’t want to be held accountable for bad data. In his two terms, the president has shown an impulse to ignore or manipulate figures that could tarnish his legacy.
Last month, when she faced data suggesting her tariffs were damaging the U.S. labor market, Trump fired the director of the Bureau of Labor Statistics and said the figures had been tampered with.
Remember your obsession with the crowds who attended the 2016 inauguration? Or in March 2020, when you defended the idea of keeping passengers on a cruise on the high seas because you preferred the number of passengers to stay the same? Or the time he was declared responsible for fraudulently inflating the value of his real estate?
That’s why it’s important to consider Trump’s proposal to reduce corporate transparency in the context of his attempt to hide any negative figures that may be associated with his administration.
So far, corporate earnings have largely resisted Trump’s trade war, partly explaining the high profitability of the stock market despite economic difficulties. But the longer the tariffs are maintained, the greater their impact on the final result.
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