Trump Advocates for Semi-Annual Reports: A New Path Forward for U.S. Companies?

In a recent communication on Truth Social, former U.S. President Donald Trump suggested a provocative alteration to the financial reporting landscape: shifting from quarterly to semi-annual reports. This proposal has already garnered attention from the U.S. Securities and Exchange Commission (SEC), which is considering the repercussions of such a change.

Taking a Cue from China

Trump argued that the elimination of mandatory quarterly reports would ease the operational burdens on companies, thereby allowing them to focus on long-term strategies. He cited China’s emphasis on long-time scale planning, suggesting that the U.S. could benefit from a similar approach.

“China looks to business planning with a vision spanning 50 to 100 years, whereas we focus merely on quarterly outcomes,” Trump emphasized, reigniting a conversation he had initially broached during his presidential term.

SEC’s Responsive Action

The SEC Chair, Paul Atkins, has marked this proposal as a priority, launching a formal review to evaluate the feasibility of reducing regulatory red tape. Current regulations necessitate U.S. companies to disclose quarterly financial reports, but predictions are optional. Transitioning to a semi-annual reporting model requires only SEC commissioners’ majority approval, bypassing the need for legislative intervention. According to Evercore ISI’s policy analyst Sarah Bianchi, the transition, if approved, could be completed within six to twelve months.

Industry Veterans Weigh In

This concept isn’t without precedent. In 2018, influential figures like Warren Buffett and JPMorgan’s CEO Jamie Dimon advocated for eliminating quarterly forecasts to prioritize sustainable growth, albeit without dismissing quarterly reports altogether. Other entities, such as Norway’s Sovereign Fund and exchange operators like LTSE, have similarly pivoted their focus to long-term objectives.

Debate on Transparency

Conversely, some voices urge caution. According to Art Hogan, B. Riley Wealth Management’s chief market strategist, investor access to frequent information is crucial. Quarterly reports offer a timely snapshot of company health, a feature he considers invaluable given structural differences between U.S. markets and those of the UK or EU, where semi-annual reporting suffices and is supplemented by voluntary disclosures.

Global Reporting Practices and Future Prospects

Globally, practices vary: Chinese companies face stringent requirements including quarterly, semi-annual, and annual reports, while Hong Kong mandates only semi-annual reports. The UK and EU also prefer semi-annual filings with voluntary updates as needed.

As the SEC evaluates Trump’s proposal, both supporters and skeptics eagerly watch to see if this discussion evolves into actionable policy.