It will be tough for Trump's SEC to overhaul reporting rules

It will be tough for Trump's SEC to overhaul reporting rules

It will be tough for Trump's SEC to overhaul reporting rules

SEC Chairman Jay Clayton, a Trump nominee, has said increasing the number of public companies and initial public offerings are among his top priorities.

President Donald Trump says he's asking federal regulators to look into the effectiveness of the quarterly financial reports that publicly traded companies are required to file.

There will now be an investigation into the impact of this policy idea by the Securities and Exchange Commission (SEC), the president added.

The move would improve "flexibility and save money" Trump said. According to him, PepsiCo Inc Chief Executive Indra Nooyi, who is leaving the company, is one of the business leaders who broached the topic with him recently.

While Trump can not force Clayton to make changes, as a matter of courtesy the SEC chairman may promise to study the issue.

In a tweet early Friday, Trump said that after speaking with "some of the world's top business leaders", he's asked the U.S. Securities and Exchange Commission to determine whether shifting to a six-month reporting regimen would make more sense.

SEC spokesmen didn't immediately respond to a request for comment.

Trump believes he has the support of some executives for a change.

Even if the SEC concluded the change was a good idea, companies would likely stick with the current regime to avoid investor backlash, said Ed Yardeni, founder and chief investment strategist at Yardeni Research.

But moving away from reporting earnings every three months would be a much more dramatic change that would nearly certainly trigger resistance from shareholders who want transparency from the companies they invest in. The report compares company earnings with that of the previous year.

In a report published by the US Treasury past year, the administration outlined policies it hoped would revitalize listings - but did not go as far as suggesting quarterly reporting requirements be scrapped.

The regulatory burdens of being a public company have been in the spotlight lately, including playing a role in why Elon Musk wants to take Tesla Inc. private.

Trump tweets the United States could abandon quarterly financial reporting after meetings with business leaders.

"They are more likely to react to other types of information and more likely to overreact", said Jill E. Fisch, a co-director of the Institute for Law and Economics at the University of Pennsylvania. "And so they don't do it, because the definition of being a successful business is narrowed to what your quarterly earnings reports are".

"Less frequent reporting can raise the cost of capital", he said. In 1996, nearly 950 companies went public, according to data compiled by Bloomberg.

The US Chamber of Commerce and other lobbying groups have also blamed compliance burdens for preventing more companies from selling shares.

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