Trump asks SEC to consider ending quarterly earnings reports

Trump asks SEC to consider ending quarterly earnings reports
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President TrumpDonald John TrumpOver 100 lawmakers consistently voted against chemical safeguards: study CNN's Anderson Cooper unloads on Trump Jr. for spreading 'idiotic' conspiracy theories about him Cohn: Jamie Dimon would be 'phenomenal' president MORE on Friday said he has asked the Securities and Exchange Commission (SEC) to study the potential benefits of allowing public companies to file reports with the agency half as often.

Trump tweeted that he asked the SEC to consider asking companies it regulates to file two revenue reports per year instead of the quarterly disclosures currently mandated by the agency.

The president said he got the idea from one “of the world’s top business leaders” and that it would “allow greater flexibility & save money” for corporations.

Trump later told reporters at the White House that the suggestion came from PepsiCo CEO Indra Nooyi, who dined with the president and more than a dozen other top U.S. executives last week.

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“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 U.S. “Stop quarterly reporting & go to a six month system,” said one. That would allow greater flexibility & save money. I have asked the SEC to study!” Trump tweeted.

SEC Chairman Jay Clayton said in a statement that "the President has highlighted a key consideration for American companies and, importantly, American investors and their families," but didn't say how or if the agency would consider Trump's request.

"The SEC’s Division of Corporation Finance continues to study public company reporting requirements, including the frequency of reporting," Clayton said, who was appointed by Trump in 2017.

"As always, the SEC welcomes input from companies, investors, and other market participants as our staff considers these important matters."

Trump cannot force the SEC, an independent federal agency, to follow through on his request, and it’s unlikely that the commission will pursue major changes to the current quarterly reporting system.

Some business leaders and policymakers have expressed concerns about the cycle of trading around short-term movements in corporate financials.

Wall Street skeptics say the current reporting system contributes to “quarterly capitalism,” a speculative investment cycle that prizes immediate financial gain over steady growth and broad benefits to the economy.

A company’s stock price is heavily influenced by whether it makes or misses its quarterly earnings forecast. Some corporate leaders say that dynamic discourages executives from making proper long-term decisions over fears they could hinder quarterly earnings.

JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett in June called on companies to stop issuing quarterly earnings forecasts, but not the reports altogether.

Dimon is the chairman of the Business Roundtable, a trade group of top U.S. executives that pushes for corporate interests in Washington, and has met with Trump during his presidency.

"Quarterly earnings, they're a function of the weather, commodity prices, volumes, competitor pricing. And you don't really control that as CEO," Dimon told CNBC in June. "Sometimes you're just like the cork in the ocean, but do the right thing anyway and you're going to be fine in the long run."

Buffett added, "When companies get where they're sort of living by so-called making the numbers, they do a lot of things that really are counter to the long-term interests of the business."

Updated at 3:14 p.m.