American firms should no longer have to report on a quarterly basis, US president Donald Trump has said.
According to Mr Trump, top business leaders from around the world claimed that removing the administrative burden of such regular reporting would boost the US economy and create jobs.
Switching to a six-monthly reporting system would “allow greater flexibility and save money,” Mr Trump said.
There will now be an investigation into the impact of this policy idea by the Securities and Exchange Commission (SEC), the president added.
Quarterly earnings guidance is used by Wall Street and City analysts to build their earnings estimates and gauge company performance against these figures. As a result, analysts have spoken out against moving to a six-monthly regime, saying it would reduce transparency.
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. “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!— Donald J. Trump (@realDonaldTrump) August 17, 2018
However, the 200-strong membership of the Business Roundtable, a lobbying group of CEOs have argued against quarterly reporting rules. Renowned investor and chairman of Berkshire Hathaway, Warren Buffett has also lent his support to such a move.
A White House spokesman said that the regime was examining “whether short-term earnings reporting requirements for public companies reduce incentives for them to engage in long-term investing in the United States".
Chris Cummings, chief executive of the Investment Association, said that quarterly reporting forced companies to focus on “artificial short-term timeframes”.
It placed “a significant administrative burden on the management on a regular basis”, he added.
A shift away from this reporting timetable would allow companies to focus on the sustainability of their business planning. This would lead to better considered investment decisions and boost productivity as a result, Mr Cummings said.
The US move comes after the German stock market operator, Deutsche Boerse, changed its requirements for firms’ reporting, in January 2016.
In Germany, full information on a company’s performance is now only required to be published twice a year, with minimal insights such as a business description and annual outlook released in the first and third quarters.