Published: Sun, August 19, 2018
Finance | By Jaime Brady

It will be tough for Trump's SEC to overhaul reporting rules

It will be tough for Trump's SEC to overhaul reporting rules

The Securities and Exchange Commission should study moving the reporting requirement to every six months instead of every three, Trump said.

In a tweet, he argued a longer time frame would "allow greater flexibility & save money". While some business leaders have groaned about the rigors associated with having to meet targets and metrics four times a year, the SEC has been reticent to make any changes.

"I asked [the leaders] what it is that would make business (jobs) even better in the U.S.", Trump tweeted. He said one had told him, "Stop quarterly reporting & go to a six month system". The Commissioners' offices did not immediately respond to a request for comment.

Trump held a dinner for business executives on Aug 8, two days after Nooyi announced her departure, at his golf club in Bedminster, New Jersey.

On the other hand, a study by experts at Duke University's Fuqua School of Business and City University of London, England, found that frequent financial reporting in itself creates short-sightedness that pushes companies to stress immediate results at the expense of longer-term investments.

The regulatory burdens of being a public company have been in the spotlight lately, including playing a role in why Elon Musk wants to take Tesla Inc. private. The report compares company earnings with that of the previous year. "And so they don't do it, because the definition of being a successful business is narrowed to what your quarterly earnings reports are".

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The quarterly reports provide important insight into a company's potential trouble spots, and force its executives to address shareholders' concerns while enforcing corporate discipline, corporate governance experts say.

US President Donald Trump's proposal, released via Twitter, would do away with the decades-old tradition of obligating companies to file quarterly reports and move to a semi-annual system.

"You're probably going to get a debate where you have people saying these reports are unnecessary, and I don't think that will convince a lot of people", said Martin, who's now a senior counsel at the law firm Covington & Burling. Some said the change could help companies to invest more in their businesses rather than race to show profit gains each quarter.

In 1998, there were around 7,500 listed companies in the United States, compared with around 4,300 in 2017, according to data compiled by the World Bank.

Business groups including the US Chamber of Commerce, the Securities Industry and Financial Markets Association and exchange operator Nasdaq have been lobbying hard over the past year for lawmakers and the SEC to relax listing rules, warning that the decline in listings hurts jobs and pension funds.

"Investors need timely, accurate financial information to make informed investment decisions", Amy Borrus, deputy director of the Council of Institutional Investors, said in a statement.

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