United States President Trump has called for the cancellation of quarterly financial reports for publicly traded companies, advocating for semi-annual reporting instead. He believes this change would allow corporate executives to focus on long-term goals rather than short-term indicators. US Treasury Secretary Scott Bessent expressed that this move would be beneficial for investors as it could reduce costs for public companies and reverse the shrinking of the public market.
This proposal has surprisingly received cautious support from some investors who emphasize climate and sustainability issues. They believe that eliminating quarterly reports could help companies concentrate on long-term value and risk management.
During an interview with CNBC in London on Tuesday, Bessent stated, “President Trump understands that our public markets in both the UK and the US are contracting. This could perhaps be a way to bring listed companies back in line and reduce costs without harming investor interests.”
Currently, an increasing number of companies are choosing to remain private to avoid the escalating costs of quarterly reviews and compliance. The number of publicly listed companies in the US has decreased from over 7,000 in 1996 to less than 4,000 in 2020.
For over fifty years, US publicly traded companies have been required to submit a 10-Q form to the US Securities and Exchange Commission (SEC) every quarter, disclosing their financial status and operating results. However, in the UK, EU, and Hong Kong, companies are only required to report semi-annually. Trump believes that eliminating quarterly reports would align the US with many international jurisdictions that already follow a semi-annual reporting system.
Over the past decade, numerous prominent European companies have chosen to leave their local markets and opt for listing in the US to gain higher valuations and regulatory benefits. If the US eliminates quarterly reports and further aligns with Europe, it could potentially attract more foreign companies to list in the US.
Trump’s proposal aligns with the stance of influential figures in the business sector, including Warren Buffett and Jamie Dimon, CEO of JPMorgan, both of whom have previously argued that short-termism harms the economy.
In the realm of investment, some investors have expressed support for this proposal. David Pitt-Watson, a corporate governance expert at the Cambridge Judge Business School, stated, “Responsible investors have never been advocates of quarterly reports because they often encourage more transaction-oriented behavior rather than sound shareholder management.”
Nick Duncan, Sustainable Investment Director at Aberdeen Asset Management, mentioned, “We hope companies will consider the significant impacts of their strategies with a long-term view and plan accordingly to mitigate any sustainability-related risks. Therefore, if eliminating quarterly reports can help achieve this goal without compromising transparency and disclosure, then it could be a positive step.”
He added, “In particular, if reducing the burden of quarterly reporting can encourage companies to maintain or enhance current levels of sustainability reporting.”
Duncan also pointed out another significant benefit of this move could be reducing the “quiet period” for companies before financial report disclosures, during which investors are usually unable to communicate with the company.
Andrew Ninian, Director of Corporate Governance, Risk, and Tax at The Investment Association, stated that the UK and EU transitioned to mid-term reporting over a decade ago, which has helped strengthen sustainability efforts.
He commented, “Eliminating mandatory quarterly reports gives companies greater flexibility to focus on long-term investment decisions, strategies, and reporting, rather than managing short-term goals.”
However, some critics have warned that the cancellation of quarterly reports could pose a threat to investor protection and information transparency. The Council of Institutional Investors (CII), representing pension funds, noted that the absence of quarterly reports might not adequately protect investors.
Hayley Grafton, Senior Analyst of Sustainable Investments at EdenTree Investment Management in the UK, mentioned, “While semi-annual reporting works in countries like the UK and Australia, the structural differences in the US make the situation more challenging.”
She cited profit warnings as an example, stating that in the UK, they are regulated disclosure items, whereas in the US, it is not a legal requirement, and companies may choose not to update.