Trump Advocates for Semiannual Financial Reporting for US Companies

On Monday, President Trump suggested that U.S. companies should be permitted to report their revenues every six months instead of quarterly. He believes that if the Securities and Exchange Commission (SEC) approves this change, it would be a significant adjustment for American businesses.

“This saves money and allows managers to focus on running the company properly,” Trump stated in a post on Truth Social, highlighting an initiative he didn’t address during his previous term. He emphasized that any changes would still require SEC approval.

Currently, companies are obligated to disclose their financial statements every 90 days. Transitioning to a six-month reporting schedule would not only change disclosure requirements but also align the U.S. with practices in the UK and European Union.

In 2018, corporate leaders like Jamie Dimon and Warren Buffett discussed in a Wall Street Journal article how short-term reporting could be detrimental to the U.S. economy.

Some investors are concerned that extending the time between financial reports may lead to decreased transparency and increased market volatility.

“Focusing solely on quarterly revenue targets may drive companies to make decisions based on short-term performance rather than long-term growth,” mentioned Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago, who sees potential benefits in the proposal.

He pointed out that companies often prepare quarterly reports that don’t differ significantly from one quarter to the next.

Trump’s stance on this topic isn’t new; he had previously urged the SEC to consider eliminating reporting requirements for public companies in 2018. That proposal faced pushback from investors and did not make progress.

The SEC has yet to respond to requests for comment on the current situation.

Investors suggest that one of the reasons U.S. stocks trade at a higher premium compared to those in other markets is the stringent financial reporting mandates. Data shows that the Benchmark S&P 500 Index is currently trading at a revenue estimate of 24.3 times over the next 12 months, compared to 15.28 times for the European STOXX 600.

Interestingly, firms in the U.S. are not always consistent with quarterly reporting. The shift from semiannual to quarterly reporting was mandated by regulators in 1970.