'Let markets decide': US SEC chief open to easing quarterly reporting rules

US SEC Chairman Paul Atkins said the regulator will consider proposing a rule change in financial reporting, allowing companies to choose whether to report quarterly or semi-annually

Days after United States (US) President Donald Trump suggested a six-monthly reporting calendar for listed companies, Securities and Exchange Commission (SEC) Chairman Paul Atkins on Friday said the regulator will consider proposing a rule change on the matter.

 

“In principle, I think to propose change in what our rules are now, I think would be a good way forward, and then we’ll consider that and move forward after that," Atkins said in an interview with CNBC.

 

He further added that once the rules are changed, companies will be able to choose between the currently-mandated quarterly or semi-annual reporting.

 

“For the sake of shareholders and public companies, the market can decide what the proper cadence is,” he said, adding that investors would push for information in line with a company’s activities. He said that banks also "will have something to say" for companies with debts, issuances and other similar issues. 

 

Earlier this week, Trump called for a similar change in financial result reporting, stating that it will save money for the companies and allow managers to focus on running their businesses effectively.

 

"Subject to SEC Approval, Companies and Corporations should no longer be forced to 'Report' on a quarterly basis (Quarterly Reporting!), but rather to Report on a 'Six (6) Month Basis'. This will save money, and allow managers to focus on properly running their companies. Did you ever hear the statement that, 'China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis???' Not good!!!" Trump said.

 

Adding to the same argument, Atkins stated that there has been a lot of discussion in the past few years about how the quarterly reporting emphasises short-term thinking.

 

Previously, some industry leaders have also called for ending quarterly guidance, if not the results themselves.

 

“In our experience, quarterly earnings guidance often creates an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability,” Berkshire Hathaway’s Warren Buffett and JPMorgan Chase CEO Jamie Dimon wrote in a 2018 piece for The Wall Street Journal.