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Trump to SEC: Examine Bi-Annual Reporting System

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President Trump expressed interest in thinking in a different way than the typical method of splitting the economic calendar into quarters. He thinks it would be better to go with only two earnings reports a year for public companies, The New York Post reports.

Instead of the required four quarterly reports, companies would have to report to shareholders only twice a year if the proposal is approved, which is what has been seen in Europe for about five years now.

“In speaking with some of the world’s top business leaders, I asked what it is that would make business (jobs) even better in the US. ‘Stop quarterly reporting & go to a six month system,’ said one,” Trump tweeted early Friday in his first indication that he was considering the idea. His tweet impacted the stock market and investor outlook.

“That would allow greater flexibility & save money. I have asked the SEC to study!” he also said, showing he may be more serious about the idea than it just being a curiosity. One of the potential benefits of this setup would be that companies may be more incentivized to put a lot more attention on creating long-term goals and sustainability rather than scrambling to impress with earnings reports every few months. On the other hand, the limited reporting requirements could lead to less transparency.

Trump said that PepsiCo Chief Executive Indra Nooyi, who is about to leave the company, was the reason why he decided to take a look at the concept of reporting on a bi-annual schedule instead of quarterly. It should be noted that Nooyi seemed to downplay some of the comments when she was reached for her own comment after Trump named her.

“My comments were made in that broader context and included a suggestion to explore the harmonization of the European system and the US system of financial reporting,” Nooyi said in a statement.

It would make sense for a CEO like Nooyi to speak out about this issue because she would know best what it is like to have to constantly think about the next quarterly report, which can lead to all sorts of pressure from people looking at the short-term landscape. While activist investors could present this issue, Nooyi’s position isn’t exactly widespread among the business community.

Some people in Washington have voiced their support for the president’s ideas and agree that the SEC should examine it. “I applaud the President’s continued efforts to evaluate the impact and cost of federal regulation on American businesses and entrepreneurs,” Rep. Jeb Hensarling, R-Texas, said in a statement.

The SEC itself sees Trump’s directive as something that’s been long needed and could “encourage long-term capital formation.”

“The SEC’s Division of Corporation Finance continues to study public company reporting requirements, including the frequency of reporting,” Chairman Jay Clayton said in a statement Friday.

By: John Vigar

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