What Would Happen if the SEC Abandoned Quarterly Earnings Reports

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The discussion with Pepsi's CEO wasn't the first time White House officials have heard from the business community about quarterly reporting requirements.

Publicly traded companies in the United States now file their earnings reports every three months, or four times a year.

The commander in chief's sentiments stirred up an ongoing debate, which has seen leaders of publicly traded firms, on one side, complain of the pressures - stoked by quarterly earnings releases and conferences calls - to meet short-term goals at the expense of long-term stability.

Still, Van Sinderen cautions, six months can be a long time for smaller companies - particularly those shouldering hard challenges - and can lead to other issues should those two reports differ drastically.

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The SEC has been reluctant to make changes in quarterly reporting, which has always been a cornerstone of U.S. capital markets. "So we're looking at that very very curiously, we're looking at twice a year instead of four times a year". "Most agree that a short-term only view can inhibit long-term strategy", she said. Being a public company subjects Tesla "to wild swings in our stock price" and makes it a target of investors betting the company's stock price will fall, he wrote in an email to employees last week.

Donald Trump has called for United States companies to issue financial reports just twice a year rather than four times. "One of the inherent issues with quarterly reporting is that it does tend to drive management to make decisions geared toward short-term metrics, which is not always in everyone's best interest".

Doing away with quarterly reports would help corporations save money.

"I'd like to see twice, but we're going to see", Trump later said to reporters outside the White House, when asked about his tweet about changing SEC reporting requirements.

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Earlier this year, Berkshire Hathaway Inc.'s Warren Buffett and JPMorgan Chase & Co.'s Jamie Dimon urged companies to stop issuing quarterly earnings guidance. Less-frequent public disclosures could hand another advantage to sophisticated investors with easy access to corporate executives, corporate governance experts said.

Trump said he got the idea after speaking with "some of the world's top business leaders". "Investors need timely, accurate financial information to make informed investment decisions". What is clear is that investors are more reluctant to invest with companies when they have less information on their performance. Japan, though, moved in the opposite direction, gradually forcing companies to shift from semi-annual to quarterly reporting during the 2000s.

"You have such a long dark period where there is no information going out to the public", said Robert Pozen, senior lecturer at MIT Sloan School of Management and former vice chairman of Fidelity Investments.

There are many potential downsides, including the prospect that fewer financial reports could encourage insider trading and exacerbate volatility around earnings.

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