Quarterly vs Half-Yearly Reporting: Weighing Trump’s Proposal and Its Global Impact

US President Donald Trump has said companies should no longer be required to report quarterly earnings. Switching to half-yearly reports “will save money, and allow managers to focus on properly running their companies,” he wrote on Truth Social.

Trump has railed against quarterly earnings for years — he also put the idea forward in his first term — and he is far from the only one. Supporters of less frequent reporting argue that it will give companies the breathing room they need to plan for the long term. They also contend that looser rules will make public listings more attractive and spur more companies to float.

Short-term thinking and quarterly reporting have been blamed repeatedly in the USA for slowing productivity growth, massive share buybacks, and plummeting rates of corporate capital expenditure between 1980 and 2020. CEOs, the thinking goes, are so consumed with meeting market expectations that they throw money at investors and engage in short-sighted cost-cutting to keep their share prices up.

Such arguments have avid adherents, particularly in the UK, where the Investment Association led a very successful campaign to cut back to half-yearly reports, on the grounds that shorter increments distracted management and created moneymaking opportunities for hedge funds and algorithmic traders.

At the same time, the number of US public companies has dropped by around half since 1996 to below 4,000, while the ranks of private equity-backed groups have quintupled to more than 11,000. Start-ups are staying private longer, and ordinary investors are being shut out of large parts of the economy. JPMorgan Chase chief executive Jamie Dimon was so concerned about the problem that he raised it in his 2023 shareholder letter, writing: “I fear we may be driving companies from the public markets.”

But regular financial reporting is no passing regulatory fad. The principle dates back to the 1929 Wall Street crash, which made clear that many public companies had promised investors the moon while revealing little of their decidedly earthbound financial workings. A 1934 law gave the SEC the power to require “periodic” earnings reports and define precisely what that meant.

Quarterly reporting itself has been a bedrock of US markets since 1970. Well-run companies use the requirement to update investors on their progress.

More troubled groups are forced to disclose potential legal and regulatory problems, which is more important in the US than in places like the UK and Germany, where companies have a duty to inform the market quickly of material changes. That is one reason investor groups opposed Trump’s first tilt at quarterly reporting and are now raising concerns again.

The one thing that scrapping quarterly earnings would clearly do is widen the gap between ordinary investors on the one hand, and company insiders or those with private sources of information on the other. Trump’s proposal will only advantage those on the right side of that divide.

The position of periodic reporting for Indian listed corporations is also, for the most part, similar.  While there are merits to the existing system of quarterly reporting, there are undoubtedly serious inconveniences associated with the requirement of reporting at short intervals.

Obviously, there will be benefits to changing to half-yearly reporting, provided adequate checks and balances are in place.  Thus, instead of merely ignoring the changes happening in the world, it may be worthwhile to explore options, and the regulator will do well to thoroughly examine the pros and cons and arrive at an optimum position.