President Trump floats a lot of off-the-cuff ideas via Truth Social—but it seems like his comments about trimming down the corporate earnings calendar might actually be for real.
Today, SEC Chair Paul Atkins announced that the agency will propose a rule change to switch from a quarterly earnings schedule to a semiannual cadence, reversing a requirement that’s been around since 1970. If the rule change is passed, it would be up to companies to decide whether their report card comes out four times a year or just twice.
Trump’s argument, which he laid out in a post on Truth Social, is essentially that reporting every quarter is too onerous and expensive for management, and keeps companies too focused on short-term earnings results instead of investing for the long term.
“For the sake of shareholders and public companies, the market can decide what the proper cadence is,” Atkins said on CNBC’s Squawk Box today.
Warren Buffett and Jamie Dimon suggested something similar back in 2018, arguing public companies are fixated on the short term (although they were talking about limiting guidance, not throwing away quarterly earnings altogether). We’ve also written before about how onerous paperwork is part of the reason there are fewer and fewer companies going public in the US these days.
But most economists and analysts have strongly pushed back against the idea.
“Students don’t like grades and many business leaders don’t like quarterly earnings reports. The reason is the same,” wrote Larry Summers on X. “Being monitored and accountable for results is painful. The President's idea of eliminating quarterly reports will cause companies and the markets to function less well.”
What would fewer earnings mean for investors?
For companies, less homework would be welcome. But for investors, limiting earnings reports would reduce transparency, and inevitably lead to more volatility when earnings are announced.
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This would especially hurt everyday retail investors, who don’t have the ample information infrastructure that Wall Street does. The gap in publicly available information would also increase the risk of insider trading, critics argue.
On top of that, it’s unclear if reporting twice a year instead of quarterly would really change the way executives invest for the long haul. After all, six months isn’t that long.
The US wouldn’t be the first to go down this route, either: In 2013, the EU allowed companies to choose whether they report quarterly or semiannually. The Wall Street Journal noted that there hasn’t been a surge of better management or more successful companies in Europe as a result. In fact, studies on Europe’s change have shown fewer earnings announcements lead to less accurate analyst forecasts.
Perhaps the most devastating impact of all, however, would be fewer Tour de Earnings columns in this newsletter.—LB