The View | Trump gets it right (for once): quarterly corporate earnings reports need to go
Stephen Vines says the US should replace three-monthly filings with half-yearly reports and stop driving executives to prioritise short-term goals
The point being that he has urged the United States Securities and Exchange Commission to scrap the requirement for listed companies to produce earnings reports on a three-monthly basis.
Moreover, and things are getting seriously weird here, Trump’s reasoning is logical and coherent. He says that a move to six-monthly reporting would save money and increase flexibility. He bases his view on conversations with business leaders, which is also entirely plausible because there has been a growing groundswell of opinion for the US to come into line with other jurisdictions, including Hong Kong, which are quite satisfied with six-monthly reporting.
Besides the issue of inconvenience, the need to churn out earnings figures four times a year encourages the kind of short-termism that exasperates executives trying to build companies while under intense pressure from shareholders to produce bigger and better figures regardless of whether, for example, it would make sense to forsake immediate earnings growth in favour of more investment and a longer-term perspective.
That said, there is a reason why this kind of frequent reporting was introduced in the first place and it revolved around the need for greater accountability and transparency. Shareholders who, after all, are company owners needed a better and more current insight into how their investments were performing.
