Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
President Donald Trump has endorsed a significant overhaul of U.S. financial reporting, advocating for public companies to cease quarterly financial disclosures in favor of semi-annual reports. This proposed shift, announced via a Truth Social post, aims to combat short-term corporate thinking and allow management to focus on long-term strategic goals, though it could also reduce the timeliness of insights into the business world and the broader economy.
Trump’s Rationale
In his social media statement, Trump argued that companies “should no longer be forced to ‘Report’ on a quarterly basis” and instead adopt a six-month reporting cycle. He asserted that such a change would “save money, and allow managers to focus on properly running their companies,” contrasting U.S. practices with what he described as China’s “50 to 100 year view on management of a company.”
This criticism of “quarterly capitalism” and its promotion of short-term thinking echoes sentiments previously expressed by prominent figures such as JPMorgan Chase CEO Jamie Dimon and investor Warren Buffett. Even Hillary Clinton, Trump’s 2016 presidential opponent, voiced deep distress about the practice in 2016.
Proponents of semi-annual reporting argue that it would encourage Corporate America to prioritize long-term challenges and opportunities over immediate stock market reactions. Additionally, some suggest that the regulatory burdens associated with quarterly reporting have contributed to a decline in the number of public companies in the United States.
Regulatory Path and Industry Support
Trump acknowledged that any such change would be “subject to SEC Approval,” referring to the necessary regulatory sign-off from the Securities and Exchange Commission. This is not the first time Trump has urged the SEC to consider this shift; in 2018, he called on the agency to study a move to a six-month reporting system to “allow greater flexibility & save money.”
The Long-Term Stock Exchange, an exchange backed by major investors including Andreessen Horowitz and Founders Fund, is reportedly preparing to petition the SEC to eliminate the quarterly earnings report requirement. Bill Harts, CEO of the Long-Term Stock Exchange, told The Wall Street Journal that the idea of moving away from quarterly reporting “has come” given the perceived burdens of being a public company.
Internationally, regulators in both the European Union and the United Kingdom ceased requiring quarterly results in the 2010s, adopting six-month reporting periods instead.
Analyst Outlook and Potential Hurdles
Jaret Seiberg, managing director at TD Cowen Washington Research Group, noted that the switch to semi-annual reporting has moved “from improbable to probable though not guaranteed.” Seiberg highlighted an existing industry push for this change and the inclination of SEC Chair Paul Atkins, a Trump nominee, to reduce regulatory red tape. He suggested this could be “an easy policy win for SEC Chair Paul Atkins to deliver to the President.”
However, implementing such a change would require time, with SEC staffers likely needing at least six months to craft a proposed rule and gather supporting data.
Concerns About Timeliness
Despite the arguments for longer-term focus, a move away from quarterly reporting raises concerns among shareholders, economists, and policymakers who rely on timely updates from major companies. Quarterly reports provide critical insights into economic trends, such as shifts in travel demand from airlines, early warnings on loan losses from banks, and current updates on the artificial intelligence boom from Big Tech firms.
Shifting to a six-month reporting period could delay these vital insights, potentially exaggerating stock market fluctuations during periods of economic or industry change.
