The chairman of the Securities and Exchange Commission said Thursday the agency is unlikely to shift corporate reporting requirements from quarterly to six-month cycles, an idea proposed by President Trump earlier this year.
A federal law requiring publicly traded companies to disclose their financial performance was passed in 1934, and the rules were tightened in the early 2000s. Critics charge that earnings reports every three months put too much pressure on executives to deliver short-term gains, prompting them to make decisions that harm companies in the long haul.
Trump appears to agree. In August, he disclosed via Twitter that he had asked the SEC to explore a shift to six-month reporting.
While SEC Chairman Jay Clayton initially said the agency was studying potential changes to encourage long-term investment and improve shareholder protections, the rule cited by Trump appears likely to remain intact for now.
"I don’t think quarterly reporting is going to change for our top names anytime soon,” Clayton said at an event hosted by the Bipartisan Policy Center. The White House didn't immediately respond to a request for comment on Clayton's remarks.
Trump's proposed change would probably be welcomed by some U.S. companies. Tesla founder Elon Musk, for instance, has been critical of the quarterly reporting requirement and even floated taking the carmaker private to avoid it. The idea, published in a tweet, launched an SEC investigation and subsequent settlement that required Musk to relinquish his role as chairman of the board.
Berkshire Hathaway Chairman Warren Buffett and JPMorgan Chase Chief Executive Officer Jamie Dimon, meanwhile, have suggested that public companies refrain from projecting future earnings, a practice that can lead to similar short-term thinking.
Clayton argued that investor focus on immediacy is caused by a combination of factors, not the quarterly reporting requirement alone.