The Financial Times reports this morning that President Trump this morning went on Twitter to call for an end to the issuance of quarterly reports by public companies, suggesting that they move to a semi-annual reporting system.
Trump said that he has asked the Securities and Exchange Commission (SEC) to study such a policy shift.
FT writes that Trump said “he asked ‘business leaders’ what would improve the US job market and one of them suggested shifting from reporting results on a quarterly basis to a ‘six-month reporting system’. He added the move would allow ‘allow greater flexibility & save money’.”
If the US were to make such a move, it would not be a case of America First; the European Commission ended the requirement for quarterly reports back in 2013.
Trump said that he has asked the Securities and Exchange Commission (SEC) to study such a policy shift.
FT writes that Trump said “he asked ‘business leaders’ what would improve the US job market and one of them suggested shifting from reporting results on a quarterly basis to a ‘six-month reporting system’. He added the move would allow ‘allow greater flexibility & save money’.”
If the US were to make such a move, it would not be a case of America First; the European Commission ended the requirement for quarterly reports back in 2013.
- KC's View:
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One of the thins that FT also notes is that “critics of the quarterly system have argued that the long-term Wall Street tradition is expensive and distracts companies from longer-term financial goals and strategy. JPMorgan chief executive Jamie Dimon and Berkshire Hathaway’s Warren Buffett have previously argued for scrapping quarterly guidance.”
But that’s not precisely correct.
I went back to check on the story I did about this last June, and noted that Buffett and Dimon are not arguing that quarterly reports should not be issued - in fact, they say that they are “an essential aspect of U.S. public markets.” But, they say, communications with shareholders ought to be tailored to the needs and strategic goals of individual companies, not based on a template established by the investor class.”
I completely agree with this. The problem with quarterly reports is that, because they all read the same, they do not take into account the fact that different companies have different goals and priorities. If a company has to spend more on labor because it has a focus on customer service, it should not be evaluated the same way as a company that is EDLP and running with low labor costs. Part of the problem is with the analysts and investor class, but there also ought to be greater context and nuance in how reports are issued.
