Ditch quarterly earnings like Trump says? What’s needed is better reporting — not less.
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Trump asserts that the shift to less frequent financial reporting will help executives take a long term approach. But a 6-month window is not long term. Moreover, a study of UK companies shifting from quarterly to semiannual reporting in 2014 did not show a marked increase in capital investments or research spending.
On the other hand, the costs of shifting to 6-month reporting are significant. The long pause in the release of new public information would undermine the efficiency of stock prices and create more temptation for insider trading.
Instead, we suggest reforming quarterly reporting to focus on earnings press releases, instead of dense filings with boilerplate. Read the article here.
(The GCFP does not make policy recommendations, and any opinions expressed are those of the authors and not the GCFP.)
