India Inc backs Trump's 6-monthly reporting plan; fund managers push back

A majority of chief executive officers (CEOs) in India favour moving to a half-yearly reporting of earnings — from quarterly now — aligning with United States (US) President Donald Trump’s recent suggestion, though mutual fund leaders are opposed to the idea, according to a Business Standard dipstick survey.

 

Eleven CEOs and as many MF heads took part in the survey.

 

On September 15, Trump endorsed a proposal by the Long-Term Stock Exchange to reduce reporting frequency, arguing it would cut costs and allow management to focus on business execution.

 

On Monday, US Securities and Exchange Commission Chairman Paul Atkins said the proposal would give companies the option to report on a semi-annual basis, though many firms might still choose to publish quarterly results. However, regulator sources in India suggest there is no such proposal being considered at present. 

 

Sixty-four per cent of the corporate leaders said “yes” to six-month reporting on grounds that it would reduce short-term pressures and give management more room to focus on business strategy and execution. On the other hand, nearly 73 per cent of mutual fund top executives want the status quo, stressing that quarterly results are critical for investors, who depend on timely disclosures to assess company performance and allocate capital effectively.

 

The sharp divide highlights a gap between corporate boards seeking operational flexibility and the investor community’s demand for consistent, transparent reporting.

 

India Inc leaders say six-month reporting puts less pressure on time, enabling a bigger focus on business strategy. Besides, it leads to savings, even if these may not be significant. “Cost and pressure are secondary at times. In many cases, there is not really any major event in a quarter for the company to report. A six-month report will be a good tool to provide a meaningful discussion,” said the CEO of a real-estate firm. The CEO of a financial-services firm said: “It will help focus better on executing plans and demonstrating the effect of business initiatives.”

 

A steel-sector CEO, however, gave a contrarian view and said the current system was better because governance might get diluted in a six-month reporting cycle.

 

Most money managers also see little benefit in doing away with the current system. Some warn it could reduce transparency and lead to more volatility. And importantly, it could weaken safeguards on investor protection.

 

“Studies indicate that markets tend to reward companies that provide greater transparency and consistent disclosures. Shifting from quarterly reporting would reduce management interaction and earnings calls, potentially creating information asymmetry. This, in turn, could heighten uncertainty, amplify stock-price volatility, and weaken both investor confidence and accountability,” said the chief investment officer of a fund house.