Donald Trump has dusted off an old idea: that America’s public companies should no longer bother reporting quarterly earnings. Trump has called for six-monthly disclosures, arguing this would cut costs and let bosses “properly” run firms.
China takes a century-long view, says Trump, while the United States obsesses over three months at a time.
Does Trump have a point? Britain and Europe scrapped compulsory quarterly updates more than a decade ago. Business grandees such as Warren Buffett, Blackrock’s Larry Fink and JPMorgan’s Jamie Dimon have complained that the ritual of meeting short-term forecasts distracts managers and discourages firms from going public. Advocates say fewer filings would reduce box-ticking and promote long-term thinking.
Defenders say transparency has its virtues. Quarterly updates give investors regular health checks on companies and the wider economy. Halving the frequency arguably gives insiders an informational edge and risks leaving outsiders in the dark.
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Besides, the supposed scourge of short-termism may be overstated: markets have long rewarded firms such as Amazon, Tesla, Netflix and others for sacrificing near-term profit in favour of distant growth.
Arguments aside, perhaps the complication lies more in the politics than the economics. Trump has lately attacked official statistics and the agencies that produce them.
Reducing corporate disclosures risks compounding that distrust, giving investors less information just as confidence in the numbers is fraying, and just as recent earnings reports have begun to expose the costs of his trade wars.
