President Trump Wants Fewer Earnings Reports Would Investors Win or.jpeg
European companies are only required to report profits twice a year.
The transition to semi -annual reports would liberate the time and money for companies, and may reduce the short -term thinking.
It also deprives investors of valuable information.
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The quarterly profit reports may seem to be a law of nature in the American investment world, but not every company has publicly trading the results of every three months.
It is precisely the condition of the Securities and Stock Exchange Committee (SEC), and it has been since 1970, but this may now change if the agency follows President Donald Trump’s desires.
Trump raises that the Supreme Education Council changes the condition of reports from three months to every six months. In a post on the social truth platform, Trump argued: “This will save money, and allow managers to focus on managing their companies properly.”
Report on the basis of six months far from unusual. In the UK and the European Union, reports are every six months of the standard, and there are good arguments to alleviate the requirements of financial reports.
Trump is aware of the restrictions and requirements of the management of a company circulating for the public. It was previously at the head of Trump resorts for hotels and casino and currently participating in Trump Group Media and TechnologyAnd the father is from the social truth.
It is not clear whether the change will happen, but the Supreme Education Council is known for Trump’s proposal. Let’s take a look at the pros and cons moving to semi -annual reports before discussing the influence on investors.
Photo source: Getty Images.
Trump is right to have a clear cost to comply with SEC requirements for quarterly reports, in both time and money.
The companies circulating for the public must provide 10 km after the end of the fiscal year and 10 -q for the other three four lines. Every three months, companies must write the report, confirm that it is accurate, and employed a auditor to sign it.
There is also concern that the condition of reporting an annual quarterly encourages a short -term mindset to lead the company and investors in Wall Street. The idea is that the management teams will give priority to a meeting or overcome the quarterly directives, which will not always be in line with what is better for the company in the long run.
Of course, CEOs can ignore the fluctuations of arrow price fluctuations in the short term AmazonJeff Bizus did. But the pressure to meet the expectations is clearly present.
The change procedure will also encourage more companies to advertise, as companies that are controlled, especially the reports requirements as one of the main defects of the public.
Report requirements in Europe and the United Kingdom show that many large and successful companies are only twice a year, and their work as usual (although some companies that have large American investor bases, such as AsmlEach quarter of profits remains.
It is worth noting that S & P 500 (Snpindex: ^Gspc) He has a busy record of outstanding European indexes. In the past decade, the S&P has increased by approximately 240 %, and the return of 56 % of the European Stoxx 600 index.
Of course, this is not simply due to the difference in reporting requirements, but it may reflect a different approach to investment and risk risk. After all, the United States is also famous for the existence of a larger investment capital system. It also gave birth to almost all dominant technology companies in the last generation, which hurts the argument that quarterly reports encourage short -term thinking.
In general, the transition from quarterly reports to semi -annual reports appears to be a negative net for investors, especially retailers.
Although it can encourage some business leaders to think in the long run and will save the expenses related to reporting, it will deprive the shareholders of valuable information regarding their investments. While major issues such as inflation and tariffs can change quickly, waiting six months will give investors a much lower look at the condition of each company.
It also reduces the tape for accountability in both performance and financial reports, as companies will only need to meet these standards twice a year, instead of four times a year. In addition, this change will make investors more dependent on third -party data such as Wall Street’s research, which mainly puts retail investors in an incomplete position against their institutional counterparts.
On this topic, investors and companies are at odds. Investors want more information, while resisting the companies required to provide them. However, even if the list changes, some observers believe that most companies will continue to exercise quarterly reports.
President Trump can get his desire, but do not expect the change to be the blessing of the stock market that it seems to be believed to be.
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Jeremy Bowman has positions in ASML and Amazon. Motley Fool has positions in ASML and Amazon and recommends it. Motley Fool has a disclosure policy.
President Trump wants less profit reports. Will investors win or lose? It was originally published by Motley Fool
