Companies planning to embrace the biannual reporting instead of quarterly, a proposal revived by President Donald Trump, may encounter investor backlash, an expert has warned.
Sam Rines, macro strategist at WisdomTree Asset Management, told Reuters that companies dropping quarterly reporting could face selling pressure and valuation cuts from active investment managers.
“We want, we need, more information, not less,” Rines said.
Rines added that this shift would be “a tough sell” to corporate boards, as they weigh cost savings against the potential perception of increased risk by investors.
The U.S. Securities and Exchange Commission (SEC) did not immediately respond to Benzinga‘s request for comment.
Wall Street Resists Ending Quarterly Reports
At an SEC advisory meeting last month, investors, including Ken Griffin‘s Citadel and Fidelity Investments, warned that ending quarterly reporting could boost volatility, raise capital costs, and weaken valuation accuracy, according to a previous Reuters report.
Two Sigma Investments and D. E. Shaw & Co. are reportedly among Wall Street firms informally lobbying regulators to scale back or halt efforts to end quarterly reporting, though discussions remain at an early stage.
The idea of eliminating quarterly earnings reports was also criticized by former Treasury Secretary Lawrence Summers in September. Summers referred to the plan as “a bad idea whose time should never come,” emphasizing the importance of accountability and transparency in America’s capital markets.
Debate Grows On Reporting Frequency
Trump has for years pushed to shift companies from quarterly to semiannual financial reporting. In 2018, he stated that less frequent reporting would ease short-term pressure on businesses.
SEC Chairman Paul Atkins, at the All-In Podcast with Jason Calacanis and Chamath Palihapitiya, in March, said that smaller companies could benefit from less reporting. However, Atkins warned that a potential downside could be reduced analyst coverage of stocks.
“I think this is a great debate to have right now,” Atkins said.
CNBC host Jim Cramer said that judging company CEOs four times a year due to quarterly reporting is “brutal.”
“We are too short-sighted,” Cramer said.
While broadly backing the anticipated proposal to support capital markets, JPMorgan Chase (NYSE:JPM) Chief Financial Officer Jeremy Barnum said in the latest earnings call that the company would still provide quarterly guidance through calls with analysts and investors.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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