Recently, President Trump proposed that businesses no longer need to report their earnings every quarter, reviving a suggestion he made during his first term that is now gaining some momentum.
For over 50 years, Tennessee-based publicly traded companies have been required to present results every three months.
Trump suggested instead that companies should disclose their earnings twice a year. “This will save money and allow managers to concentrate on effectively managing their companies,” he shared on Truth Social this past Monday.
This idea resonates with a proposal from the Long-Term Stock Exchange (LTSE), which recently indicated plans to petition the Securities and Exchange Commission to do away with quarterly earnings reporting. Instead, LTSE wants to give firms the option to report twice a year.
The current SEC leaders appear open to easing regulatory burdens, and attendees of a recent meeting with LTSE representatives expressed optimism about their proposed changes, as noted by The Wall Street Journal.
However, investors might not be thrilled about this change. Many appreciate the clarity that comes from regular earnings disclosures because they also include earnings calls for analysts to pose questions to executives.
Should a change happen, it will take time. The SEC usually broadcasts the petitions it receives and invites public feedback.
LTSE is known as a trading platform aimed at firms that prioritize long-term strategies, and the changes they propose would pertain to all U.S. publicly traded companies, not just those listed on their exchange.
Champions of this shift argue that it could help reverse the declining trend of public companies in America. Many firms keen on going public often cite the substantial amount of time and money needed for the tedious tasks of maintaining a public listing as a key reason for opting to stay private or sell off instead.
In Europe, regulations were altered in 2013 to relieve publicly listed companies from quarterly earnings submissions, even though numerous companies continue to follow this practice. The U.K. has also scrapped these requirements about 10 years ago, yet many businesses still choose to provide quarterly updates.
As of late June, there are around 3,700 companies publicly traded in the United States, marking a 17% decrease compared to three years ago, according to data from the Center for Research in Security Prices. This figure has roughly halved since it peaked in 1997.
During his initial term in office, Trump also considered removing quarterly earnings reports, suggesting that he had consulted with leading business figures about the benefits of long-term planning. In 2018, he urged regulators to examine the possibility of this shift, but nothing solid came of the effort.
That same year, Jamie Dimon, CEO of JPMorgan Chase, and renowned investor Warren Buffett penned an op-ed in The Wall Street Journal advocating for a move away from quarterly earnings forecasts, though clarifying that they were not against quarterly reporting per se. They stressed that companies often restrain their spending and hiring to align with quarterly earning expectations.
Corporations in the U.S. have been submitting quarterly earnings since 1970.
Contact Natalie Andrews at natalie.andrews@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com
