Trump backs CEOs, proposes easing corporate reporting rules

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President Trump said he had "asked the SEC to study" such a move.

US President Donald Trump has asked stock market regulators to look into ending the requirement for businesses to issue quarterly earnings reports.

A top criticism is that if companies are striving to report profit gains every quarter, they are more likely to buy back shares and cut costs than invest in their businesses.

Some investors on Friday said quarterly disclosures are essential for investment decisions and supported richer US stock valuations, and that shares could become more volatile if companies report twice yearly.

While Trump nominated SEC Chairman Jay Clayton as the agency's head, as well as two of its three commissioners (one additional Trump nominee is pending before the U.S. Senate), he does not oversee its work. "I have asked the SEC to study!" - he continued.

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.

Others said quarterly disclosures are essential for investment decisions and support richer US stock valuations, and that a change could make shares more volatile.

Trump said the idea came from conversations with the "world's top executives", including PepsiCo's outgoing chief executive, Indra Nooyi.

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"We are looking at that very, very seriously". 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.

"The difficulty in making better long-term decisions away from a quarterly reporting cycle certainly stands out as being beneficial", said Art Hogan at investment bank B. Riley FBR. In a statement, Nooyi said she and other CEOs "have been discussing how to better orient corporations to have a more long-term view".

"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".

And he said, the SEC already had implemented some regulatory changes and continued to consider others that "encourage long-term capital formation while preserving and, in many instances, enhancing key investor protections".

The president did not name the leaders.

Quarterly reports are "early warning signs of other bigger problems", Elson said. One of the reasons Tesla CEO Elon Musk wants to take his company private, he told his employees last week, was the way quarterly reports distort decisions at the company. 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.

The SEC requires listed U.S. companies to issue quarterly and annual financial reports to keep investors informed about their financial position.