Trump Calls for Bi-Annual Earnings Reports

A recent Presidential tweet may have reverberations in the securities world.

“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!” President Trump tweeted on Friday.

The idea was quickly met with support from the Chairman of the House Financial Services Committee, Jeb Hensarling who quickly issued a statement.

Jeb Hensarling, Chairman of the House Financial Services Committee
Jeb Hensarling, Chairman of the House Financial Services Committee

“I applaud the President’s continued efforts to evaluate the impact and cost of federal regulation on American businesses and entrepreneurs.  In order to sustain 3% economic growth and ensure we are able to compete with China, we must modernize our capital markets regulations in a way that maximizes economic growth while maintaining the transparency and accountability needed to protect investors.” Hensarling stated. “The bipartisan ‘JOBS and Investor Confidence Act of 2018,’ which passed the House with near unanimous support in July, would do just that. I urge my colleagues in the Senate to support small businesses, entrepreneurs and investors by passing JOBS Act 3.0.”

H.R. 5970, the Modernizing Disclosures for Investors Act. Authored by Rep. Ann Wagner (R-MO), also attempts to streamline the reporting process for publicly traded companies.

That bill, according to the House Financial Services Committee, would require “the SEC to provide a report to Congress with a cost-benefit analysis of reporting companies’ use of SEC Form 10-Q, which companies use to report information every three months, as well as recommendations for decreasing costs, increasing transparency, and increasing efficiency of periodic financial reporting by EGCs (Emerging Growth Companies).”

Publicly traded companies are required to file numerous reports, but specifically they file their earnings reports quarterly.

Earnings reports are often the catalysts for significant moves by publicly traded companies.

For instance, when Facebook announced that their quarterly earnings would be lower in July, that company’s stock fell by more than 10%.

Trump’s announcement was met negatively, at least if one was sampling the responses on his twitter handle.

“Is the upcoming quarterly (before the election) trending badly? Or is it just that your big-business buddies are angling for less oversight? Maybe both, who knows?” said one tweet.

“This is the exact issue I was afraid of when people boasted about DJT’s business acumen. He never ran a public company and doesn’t know a thing about being held accountable to the public. Quarterly reporting is a must to keep business accountable to share holders!” said another.

“Corrupt Donny always in favor of less transparency to favor billionaires with inside information over shareholders playing by the rules. #TrumpSwamp” said a third.