Summary of the Article: Potential Shift Away from Quarterly Reporting
This article discusses a potential move by the trump administration to eliminate the requirement for U.S. companies to issue quarterly earnings reports. Here’s a breakdown of the key points:
The Proposal & motivation:
* Trump’s Suggestion: President Trump expressed a desire to end quarterly reporting, believing it burdens companies and hinders long-term investment.
* Focus on Long-Term Growth: The core argument is that quarterly reporting encourages a short-term focus on profits at the expense of long-term strategy and sustainability.
* Buffett & Dimon‘s Support: Warren Buffett and Jamie Dimon previously advocated for eliminating quarterly guidance (forecasts), arguing it leads to unhealthy short-termism.
How a change Could happen:
* SEC Authority: The change doesn’t require Congressional action. A majority vote within the Securities and Exchange Commission (SEC) – currently with a Republican majority – could implement the change.
* Timeline: The process is estimated to take 6-12 months.
* SEC Independence: While the administration can influence the SEC, the commission historically maintains some independence.
Arguments For & Against the Change:
* Proponents (like Norway’s sovereign wealth fund & the Long-Term Stock Exchange): Believe less frequent reporting (semiannually) would allow companies to focus on long-term growth.
* Opponents (like Art Hogan at B. Riley Wealth Management): Argue quarterly reports provide crucial, timely openness for investors and that waiting six months for results would create more problems.They also point to the reliability of U.S. reporting standards (GAAP).
International Comparison:
* China: Has similar or even more stringent reporting requirements than the U.S.
* Hong Kong: Companies report every six months.
* UK & EU: Require semiannual reporting, with quarterly reports being optional. Though, the article argues a direct comparison to the U.S. isn’t valid due to differences in market dynamics.
the article presents a developing situation with potential critically important implications for public markets and corporate behavior. It highlights the ongoing debate about the balance between short-term investor demands and long-term company strategy.
