For the first time ever on this blog, here’s a link to Fox Business:

• President Donald Trump suggested on Monday that U.S. public companies should shift from filing quarterly earnings reports to reporting on a semiannual basis, arguing the change would cut costs and encourage long-term business planning.
• He noted that any change would be subject to approval by the Securities and Exchange Commission (SEC). 
• “This will save money, and allow managers to focus on properly running their companies,” Trump wrote on Truth Social. “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.
• The SEC said in a Monday evening statement that it was prioritizing Trump’s request.
• Trump’s proposal of scrapping quarterly reporting is not new. In 2018, during his presidency, Trump directed the SEC to study the issue, though the agency ultimately kept the quarterly requirement in place. 
• “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 and go to a six month system,” said one. That would allow greater flexibility and save money. I have asked the SEC to study!,” Trump wrote in a 2018 tweet.
• Quarterly filing requirements can be costly for companies, and they often amplify pressure from investors to deliver short-term results.
• The proposed change would also bring U.S. rules more in line with practices in the U.K. and European Union, where companies are required to file semiannually but can issue quarterly reports if they choose.
• In the U.S., however, many investors and executives remain focused on quarterly earnings performance, whether a company “beats” or “misses” analysts’ expectations. 
• By contrast, shifting to semiannual reporting would encourage a longer-term outlook.

At the time of that 2018 tweet, I opined on how “toxic Trumpian chaos slowly infects everything, whether or not in his direct line of fire,” and concluded: “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.” Well, the infection is well and truly taking hold by now, such that it’s almost hard to care about this issue (you know, next to the wreckage being inflicted on global stability, the environment and all the rest of it). Still, those last two sentences of the Fox story are obviously a highly condensed and inadequate summary of a much more involved, much-studied issue. This is what Rita Trichur wrote in the Globe and Mail:

• Modern-day investors are rightly demanding more, not less, information – and with good reason. Accounting scandals such as Enron, WorldCom and Lehman Brothers all occurred in recent decades.
• Mr. Trump’s proposal to turn back the clock to 1955, when the SEC only required semi-annual reporting from companies, would give added cover to corporate fraudsters and encourage more insider trading.
• That, in turn, will ultimately drive up the cost of capital for companies and undermine the integrity of U.S. equity markets.
• Think it can’t happen? Think again. The U.S. has already achieved its worst-ever score on Transparency International’s global Corruption Perceptions Index.
• If the SEC mandates even less transparency from U.S. public companies in the digital age of investing, it will absolutely result in higher risk premiums and lower stock prices.

Whether or not the specific prediction about increased cost of capital is borne out (which in any case would probably be hard to separate from other likely erosions in the US regulatory fabric), I also think there’s something perverse, in an age of increased capacity for generating and processing information of all kinds, about proposing to roll back a well-established aspect of formal periodic reporting. As usual, Trump’s own rationale is hopelessly superficial, suggesting no engagement whatsoever with the full range of issues: this is hardly at the forefront of the myriad ways in which companies might “save money,” and the suggestion that this rule-change would do much to endow companies with half a century’s worth of foresight seems fanciful at best (Trump’s actions, one must observe, seldom seem calibrated to ensure the country can coherently endure even for a few more years, but that’s another conversation).

Most annoying from a Canadian perspective is that after years of insisting on the necessity of quarterly reporting even for the smallest public companies, such a move by the US would no doubt prompt Canadian regulators to throw their fragile principles out of the window and go the same way, citing the usual concerns about competitiveness (another Globe and Mail article suggested there’s something coming soon). One almost wants to urge them to rush ahead and get there first, just for the sake of there being one occasion when Canadian regulation isn’t cast in the mold of craven follower…

The opinions expressed are solely those of the author.