Trump asks SEC to consider changing filing rules from quarterly to biannually

President Donald Trump had asked the Securities Exchange Commission to study how allowing companies to file reports with the agency biannually instead of quarterly would affect the U.S. economy.

It’s a move that would benefit businesses and workers, the president said.

“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.,” the president wrote on Twitter. “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!”

Currently, all publicly traded companies in the U.S. must file reports with the SEC four times a year, every three months. In addition to financial information about earnings and cash flow, these reports also include qualitative information in the form of earnings guidance, which are ‘forward-looking’ statements from management about what the company plans to do in the future.

In theory, this information helps investors make informed decisions about the future success of a company. But some argue the quarterly requirement puts unnecessary pressure on companies because it forces them to focus on short-term results.

Tesla CEO Elon Musk, for instance, wrote in a letter to employees last week that being a publicly traded company “subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.”

Other critics say companies should be required to report quarterly earnings but not quarterly guidance. That was the argument made by Jamie Dimon, the chief executive of JPMorgan Chase, and investor Warren E. Buffett in a widely shared op-ed published by the Wall Street Journal in June.

“Clear communication of a company’s strategic goals—along with metrics that can be evaluated over time—will always be critical to shareholders,” they wrote in the op-ed. “But this information, which may include nonfinancial operational performance, should be provided on a timeline deemed appropriate for the needs of each specific company and its investors, whether annual or otherwise.”

Ultimately, the SEC is an independent commission-led agency and the president cannot force it to change policies.