While it's hard to determine what will come of Trump's tweet and charge to the SEC, if such a change were to occur, Wedbush Securities analyst Christopher Svezia said there could be positives for both investors and companies.
President Donald Trump on Friday said he had instructed the US Securities and Exchanges Commission to investigate the abolition of quarterly financial reporting for US companies.
Trump said he called on the SEC to consider the change after talking with various business leaders.
Abolishing the rule would "allow greater flexibility & save money" for businesses, Mr. Trump tweeted.
Trump recently hosted company leaders at his private golf club in Bedminster, New Jersey, including the heads of Apple Inc AAPL.O , Fiat Chrysler Automobiles NV FCHA.MI , Boeing Co BA.N , FedEx Corp FDX.N , and Honeywell International Inc HON.N .
Ultimately, the SEC is an independent commission-led agency and the president can not force it to change policies.
Trump said on Twitter that "some of the world's top business leaders" have advised him that converting to semiannual reporting would improve the country's jobs climate. Chief Executive Officer Indra Nooyi - would do away with quarterly reports and move to a semi-annual system. The U.S. enacted quarterly reporting in.
Nooyi confirmed she had talked to Trump about the change of schedule.
"We are looking at that very, very seriously".
Experts have long asserted that the practice of companies publicly forecasting every quarter how they expect earnings to shake out puts too much stress on short-term performance and stock price gains. "We start preparing three weeks in advance every quarter, essentially taking nearly a third of executives' time each quarter", said Bryan Sheffield, chief executive of shale oil producer Parsley Energy Inc. Chairman Jay Clayton issued a statement Friday saying the agency "continues to study" reporting requirements, including how frequently companies should announce results.
There are also tremendous expenses associated with preparing quarterly and annual reports.
In a report published by the US Treasury previous year, the administration outlined policies it hoped would revitalize listings - but did not go as far as suggesting quarterly reporting requirements be scrapped. That can pressure executives to engage in reckless practices to hit quarterly targets or even to manipulate earnings reports.
"There are often quarterly metric fluctuations that tend to even out over six months, so one would think that some of the extreme, arguably knee-jerk reactions invests have would be reduced", explained B. Riley FBR analyst Jeff Van Sinderen.
It would be a "major move to provide less information" at a time when investors' access to information has "already been dramatically reduced", Bove said.
Billionaire investor Warren Buffett and JPMorgan Chase & Co Chief Executive Jamie Dimon wrote in the Wall Street Journal in June that USA companies should move away from giving quarterly guidance, arguing it holds back spending on hiring, investment and research, but did not call for an end to quarterly reporting.