The News
Donald Trump, Hillary Clinton, and Warren Buffett don’t agree on many things, but doing away with quarterly earnings reports for public companies is one of them. The president’s support for allowing corporate executives to report earnings every six months, instead of every three, could push an idea long floated as a fix for short-term market pressures. The idea has even gotten support from corporate lawyers for whom proofing quarterly earnings reports is, if not a source of big fees, at least a way to keep clients close.
Easing public-company burdens could make IPOs more appealing at a time when more companies are staying private for longer. The 2012 JOBS Act, which loosened reporting requirements for smaller companies, did coax some startups — one academic study found a 25% increase in listings, controlling for other factors — though nobody will confuse the 2010s as a banner decade for public markets.
It’s unclear whether investors will go along: BlackRock CEO Larry Fink has complained about “the culture of quarterly earnings hysteria” but warned that “long-termism should not be a substitute for transparency.” When the CFA Institute surveyed investors in 2019 on the topic, 65% said the benefits outweighed the costs (which are, of course, ultimately borne by investors). “The SEC is trying to solve a problem that does not exist,” went one typical comment.
When asked about any downsides, one S&P 500 CFO on Monday told Semafor that he’d get a less-frequent window into what his competitors are up to.
Notable
- “Quarterly capitalism as developed over recent decades is neither legally required nor economically sound,” Hillary Clinton said in 2015.