SEC says it continues to study frequency of company reporting

SEC says it continues to study frequency of company reporting

"If public companies moved from quarterly to semi-annual reporting, that would deprive investors of timely information and dramatically increase the potential for insider trading", said Robert Pozen, Senior Lecturer at the MIT Sloan School of Management. Many U.K. businesses have shifted to a six-month reporting schedule after the country's regulators eased requirements for quarterly reports. He added that he has asked the SEC to examine moving to a six-month reporting schedule, instead of the current system of reporting corporate results every three months.

Asking the Securities and Exchange Commission (SEC) - an independent agency - to move to twice-yearly reporting could help create jobs, Trump said on Twitter. I have asked the SEC to study!" - he continued.

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. At a July rally in Florida, Trump said the chief executive of "one of the greatest companies in the world" urged him to press his tariff fight even though it would impact his business. "So we're looking at that very, very seriously".

Analysts said the idea of having companies report less frequently was not new, with some suggesting it could make markets less transparent and more volatile when financial data is released after such a long period.

"Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace", said Amy Borrus, CII's deputy director.

"It is not the fact that you report quarterly that is the problem; it's a bad management team", he said. In a statement, Nooyi said she and other CEOs "have been discussing how to better orient corporations to have a more long-term view". Nooyi said she thinks it would be beneficial to harmonize American and European rules on financial reporting.

While calling for an end to quarterly forecasting is narrower than what Trump appears to have ordered the SEC to investigate, the two leaders' arguments echo those of people in favor of ending quarterly reporting altogether: that it effectively forces companies to focus on short-term financial performance to please shareholders, sometimes at the expense of longer-term strategy and investment.

Trump tweets the United States could abandon quarterly financial reporting after meetings with business leaders.

The SEC requires listed USA companies to issue quarterly and annual financial reports to keep investors informed about their financial position. One of the reasons Tesla CEO Elon Musk wants to take his company private, he told his employees last week, was the way quarterly reports distort decisions at the company.

He would need to draft a proposed rule-change which would then be put to an industry consultation during which investors, companies, exchanges, pension funds and public interest groups would likely bombard the SEC with information.

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