Trump Says Wall Street Should Ditch Quarterly Earnings: What Would That Mean?

The United States has required public companies to report earnings on a quarterly basis for over half a century. Will 2025 soon be the response to a Jeopardy! prompt about when that chapter in financial history ended?

President Donald Trump suggested in a social media post Monday that — “Subject to SEC Approval” — US companies should have to report only twice a year. With his red-tape-averse Securities and Exchange Commission chair Paul Atkins in place, analysts at TD Cowen predicted there’s a 60% chance he gets his wish.

The Long and the Short Game

The SEC first required semi-annual reporting for US publicly traded companies in 1955, before upping that to every three months in 1970. The simple idea was to increase transparency — 1970 happened to be the year Penn Central collapsed in what was then the largest bankruptcy in US history, with management in that case less transparent than a block of obsidian locked in a five mile-deep cave. Standards were again tightened by lawmakers in 2002, this time in the wake of the Enron collapse, when Congress required the CEO and CFO to sign off on quarterly reports.

Which brings us to the arguments. Those in favor of the status quo say quarterly reporting means investors get more information more frequently, which allows them to make better, more informed decisions. It levels the playing field between investors and insiders. Meanwhile, the S&P 500 has had a pretty fantastic run in the last half century, which suggests the reporting burden hasn’t hindered corporate performance. Those who are opposed to the status quo – and there are many, not just Trump – say companies should be encouraged to adopt long-term strategies:

• The influential law firm Wachtell Lipton wrote “quarterly cadences are often deeply disconnected from long-term business cycles, key business drivers, customer dynamics, innovation opportunities and market realities,” adding that they’re “disconnected from the time frames over which retail investors who are saving for retirement, looking to buy a home and pay college tuition are seeking a return.”
• A potential compromise could be found in the thoughts of Berkshire Hathaway CEO Warren Buffett and JPMorgan Chase CEO Jamie Dimon, two people who know a lot about investing and running a publicly traded company. They jointly advocated in 2018 for companies to keep quarterly reports but stop issuing quarterly profit forecasts, which aren’t legally mandated. Having to report every three months, Buffett and Dimon wrote, leads executives to “hold back on technology spending, hiring, and research and development to meet quarterly earnings forecasts that may be affected by factors outside the company’s control.”

What’s the Difference? If the US moved reporting standards to twice a year, it would align with the United Kingdom and some EU countries. The UK, as it happens, experimented with quarterly reporting from 2007 to 2014 before reverting, but not before providing some useful data. The CFA Institute found that quarterly reporting requirements “had no material impact on levels of corporate investment” but did increase the amount of analyst coverage on a company, as well as the accuracy of those analysts’ earnings forecasts. So hug an analyst in your life today.