Quarterly performance disclosure may become history? Trump pushes for semi-annual reports again, or expected to be implemented by 2027.

President Donald Trump is again pushing to eliminate the quarterly earnings disclosure model for businesses, instead opting to release performance reports every six months - an initiative that failed during his first presidential term that began in 2016, but now has a much higher chance of success with the White House largely controlling the Securities and Exchange Commission (SEC) regulatory policy agenda. However, after this news came out, many Wall Street analysts are concerned that reducing the frequency of financial reporting by U.S. public companies will weaken accountability and likely significantly increase stock market volatility. They generally believe that higher frequency disclosure of more information is always preferable to lower frequency disclosure of less information. Since being re-elected as President of the United States, the White House led by Trump is largely controlling the agenda of the SEC. Some Wall Street analysts predict that by around 2027, the SEC will implement a new semi-annual performance reporting system; however, investors may still oppose these changes at that time. Trump on Monday called on the SEC to allow public companies in the U.S. stock market to disclose their regular performance every six months instead of requiring quarterly performance disclosures. Trump's latest securities market initiative is seen as in line with the views of some business groups. Trump stated that this move will reduce business operating costs, allowing management teams to focus on the long term rather than short term speculation. The changes to the aforementioned rules can be made directly by the SEC or through modifications by the U.S. Congress. From a legal standpoint, the significant changes to the quarterly reporting system may not necessarily require support from the U.S. Congress, only a majority vote within the SEC. Currently, Republicans hold a 3-1 advantage within the SEC, with one seat vacant. Trump is again pushing to eliminate quarterly reports, with a high probability of success this time. Despite potential strong opposition from individual or large institutional investors, some analysts believe the SEC will eventually move towards this European traditional model of semi-annual performance reporting by 2027 or earlier. Companies such as Apple and NVIDIA may still choose to maintain the quarterly reporting system to align with widespread investor expectations. When Trump made similar calls halfway through his first term, several months later, the SEC, led by Jay Clayton at that time, sought public feedback. However, due to a busy agenda and the subsequent disruption caused by the COVID-19 pandemic to Trump administration priorities, the SEC ultimately maintained the current quarterly reporting system. Wall Street analysts and Washington insiders generally believe that this time, the idea has a very good chance of becoming reality, partly because SEC chairman Paul Atkins - a long-time advocate of reducing burdensome business procedures and regulations and a free-market Republican whose stance is nearly aligned with Trump's - is closely collaborating with the White House, which is more controlled under Trump's leadership. Breaking tradition, the White House has reviewed the SEC's regulatory agenda and has been actively pushing for significant policy changes on cryptocurrency and SEC staff reduction. This month, the SEC released a draft framework for the modifications, including a preliminary proposed matter scheduled for April, aiming to rationalize the performance disclosure of public companies in the U.S. stock market and providing a potential avenue for public consultations. Atkins will also face a more friendly U.S. Congress and a conservative-leaning U.S. judiciary, with more time to advance the typically long rulemaking and proposal approval processes - a process that requires the SEC to evaluate the impact of changes on market efficiency, competition among companies, and capital formation, and solicit public feedback. "The Trump 2.0 government era is very different from the Trump 1.0 government era. The Trump 2.0 era is much bolder, so we may really see policy actions ultimately succeed," said James Angel, a financial regulation expert at Georgetown University's McDonough School of Business, noting that the SEC has quickly and early on taken actions favoring the cryptocurrency industry. "I think there is a much greater chance of success for this revised performance reporting guideline." Investor opposition sentiment may persist in the long term. On Monday evening, an SEC spokesperson indicated that the agency is prioritizing this proposal, but declined to provide further comments on Tuesday. Jay Clayton, now serving as Manhattan's Chief Federal Prosecutor, also declined to comment. In the past, Clayton has stated that the SEC can relieve companies of their burdensome reporting requirements without harming investors. White House spokesperson Taylor Rogers stated in a statement that the White House is working with other government departments to promote the "long-term renewal of America's greatness." Brian Gardner, Chief Washington Policy Strategist at Stifel, stated in a report on Tuesday that the SEC could potentially release regulatory proposals as early as this year, with a strong likelihood of passing the proposal by next year. Major business groups, including the U.S. Chamber of Commerce and the Business Roundtable, have long called for simplification of performance reporting disclosure rules. "The modernization of disclosures helps alleviate the high cost and increasing complexity of compliance regulations, while also making it easier for investors to focus on more frequent key information and simplifying the powerful ability of investors to access key information," said Bill Hulse, Senior Vice President at the U.S. Chamber of Commerce, in a statement. An industry association executive familiar with the matter, speaking on condition of anonymity, stated that with the White House's high level of attention to the SEC's work, the rule changes are more likely to become a reality, but also expressed that some investors may be more opposed to these changes. Andrew Horowitz, an investment advisor based in Fort Lauderdale, Florida, stated, "The idea that investors will focus more on the long term rather than three months of data sounds good. However, this may lead to greater volatility at the time of financial report disclosures, as the range of possible results may cover a longer period, with negative surprises possibly not being disclosed to the market in a timely manner." The Investors' Committee representing employee welfare funds and retirement savers told media outlets and some insiders that their position has not changed since 2019, opposing potential changes and considering quarterly disclosures as important guides and investment tools for investment decisions. However, some media reports on Tuesday also pointed out cautious support from some investor groups urging companies to do more on long-term sustainability and clean energy investments. Senior analyst teams from TD Cowen emphasized the importance of information frequency, stating, "With longer intervals between earnings reports, there will be a higher degree of fundamental uncertainty. This greater uncertainty will also exacerbate market volatility when companies disclose their performance reports semi-annually." The analyst team at Wells Fargo Bank also highlighted the importance of information frequency, saying, "With longer intervals between earnings reports, there will be a higher degree of fundamental uncertainty. This greater uncertainty will also exacerbate market volatility when companies disclose their performance reports semi-annually." Wells Fargo Bank stated.