NEW YORK: US President Donald Trump on Friday said meetings with corporate executives prompted him to ask the US Securities and Exchange Commission (SEC) to study letting public companies file financial reports every six months instead of every quarter.
Half-yearly reporting would mark a huge change in US disclosure requirements and put them in line with European Union and United Kingdom rules. By tweeting that the switch would give companies more flexibility and reduce costs, Trump waded into a long-running debate on how often companies should report.
“I’d like to see twice, but we’re going to see,” Trump later told reporters when asked about his tweet. He said outgoing PepsiCo Inc Chief Executive Indra Nooyi had brought it up to him. PepsiCo declined to comment.
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.
But executives and other investors said Trump’s argument made sense because it would cut costs of compiling and filing results and remove short-term distractions for those running companies.
The SEC is an independent agency, and the president cannot force it to implement rule changes. Any move to scrap quarterly filings would have to be voted on by the SEC’s sitting commissioners, who are political appointees.
While capital market rules are not traditionally a partisan issue, a major rule change would likely meet opposition from the agencys two Democratic-leaning commissioners, Robert Jackson and Kara Stein, who generally advocate for strong corporate governance.
The SEC declined to comment. Commissioners Hester Peirce, Jackson and Stein declined to comment. A spokeswoman for Chairman Jay Clayton did not respond to a request for comment.
Even if the SEC concluded the change was a good idea, companies would likely stick with the current regime to avoid investor backlash, said Ed Yardeni, founder and chief investment strategist at Yardeni Research.
Its cockamamie idea. For starters, whats the difference between six and three months? ... Either way were talking about a very short-term period,” Yardeni added.
Under Clayton, a Trump appointee, the SEC has taken steps to relax rules for issuers, including allowing firms going public to file information confidentially, and is currently discussing easing other compliance rules.
Published in Dawn, August 18th, 2018