Join the Trump resistance: save quarterly reporting now!

The ever-spreading Trumpian sludge finds its way to the world of financial reporting

This came in a tweet (what else?) on August 17th, as follows:

  • In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. “Stop quarterly reporting & go to a six month system,” said one. That would allow greater flexibility & save money. I have asked the SEC to study!

Although this evidently isn’t a political blog, I feel it’s appropriate to set out where I stand on Trump (not that I didn’t do that before): I consider him the most destructive, regressive, contemptible person in public life. Like the parable of the blind men and the elephant, Trump’s wretchedness and inadequacy are sufficiently multi-faceted that one person’s loathing for him might take an entirely different form from another’s. For myself, I dwell less on his uncouthness and murky connections  than on how his leadership lacks even a basic awareness of the escalating complexity of our collective challenges (demographic, fiscal, environmental, etc. etc.); or of how they demand (our future pleads for) an energetic, open-minded marshaling of all the capacities of science, of youth, of social innovation, of diplomatic cooperation, of creativity. Instead, Trump provides nothing but backward-looking, wantonly ignorant, self-absorbed irrationality. In combination with his chronic bigotry, corruption, paranoia, capriciousness and all the rest of it, it embodies power at its most ugly and depraved.

Now, it’s true that even the vilest dog in creation may have the occasional good instinct. Is this such a case? I’ve written here before on the recurring debate about the appropriate frequency of interim reporting, and the possible virtues of switching to a six monthly update, or of evolving away from a one-size-fits-all approach. For instance, here’s a passage I quoted from the ICAEW Economia website:

  • (Economist John) Kay believes a new approach to financial and business information is needed. “The notion that one size fits all for reporting is a myth,” he says. “The relevant time scales for businesses vary depending on the type of firm you are dealing with.” For example, banks can appear to be doing well in any particular year. But this might simply reflect the fact that they are taking on excessive risk, which only becomes apparent over the course of several years.
  • “In this context quarterly reports would appear to be just a distraction. Firms with these very long cycles – such as those in banking, construction or energy production – could help investors more by offering comparisons of their performance at the same stage in the previous business cycle. This would not need to be updated each quarter.
  • “By contrast, there are firms for which a quarterly approach might be extremely helpful, such as in retail. Differences in reporting frequency and style would be determined by the needs of investors rather than government rules.”

Of course, as usual, Trump’s own expression of the issue is unrooted in any greater reflection than the time it took to pound out the tweet and press send. It evidences all of his superficiality: the pathetic insecurity underlying the need to assure us that this comes from “some of the world’s top business leaders” (although from all reports, many of the people who you and I might place on that list wouldn’t go anywhere near the man); the grindingly simplistic assertion that “business” and “jobs” are largely synonymous; the sense that, indeed, this all comes from what “one” person said, with no attempt on Trump’s part to solicit alternative views or weigh the arguments for himself, before asking the SEC to study (with the requisite exclamation mark!).

Obviously it’s true that getting rid of two rounds of formal corporate reporting every year would save money for some issuers at least, most directly by allowing them to trim back whatever number of full-time equivalent employees is consumed by that process, and perhaps by cutting down on external review costs. But for that to make “(jobs) even better” as a whole, you’d have to conclude that the money saved thereby would be reinvested elsewhere in the organization to create more and/or better jobs. As this hasn’t happened from the big Trump tax cut, it seems fanciful at best to expect any meaningful employment boost from this one incremental step alone. And as for greater flexibility – well, it’s equally true that companies would have even greater flexibility if they never had to disclose anything at all, so in the absence of any consideration of offsetting costs and benefits, as in the extract above, this means nothing.

The most annoying thing to me is that if the SEC does indeed take this step, Canadian regulators will no doubt feel obliged to follow suit, based on some fuzzy analysis of competitiveness in capital markets, even though in the very recent past those same regulators couldn’t convince themselves to make such a concession even for the smallest and simplest entities. If so, this would be a further example of how the toxic Trumpian chaos slowly infects everything, whether or not in his direct line of fire. The broader implications of this toxicity are so horrific that at this point, Trump’s expression of interest in messing with quarterly reporting probably provides the best possible reason for holding on tight to it and never letting go…

The opinions expressed are solely those of the author



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