By Felicity Duncan
US president Donald Trump has asked the Securities and Exchange Commission to study the potential impact of changing its requirement that companies report their earnings every quarter. Instead, he has suggested reporting every six months.
The SEC has required quarterly reports since 1934 – after the stock market crash of 1929, quarterly reports helped to build back investor trust and increase transparency. Some argue that quarterly reports help reduce insider trading by making companies’ operations more transparent and shortening the lag time between strategic decisions and their announcement.
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On the flip side, others argue that quarterly reporting puts too much short-term pressure on listed companies and encourages them to ignore long-term priorities in favour of immediate gains. Companies in Europe, the UK, and South Africa report only twice a year, and those markets seem to do OK. It will be interesting to see what the SEC’s study says.
In Premium today, you can listen to Alec Hogg and I discuss how Shaun Abrahams may have rescued the Rand by getting himself fired at just the right moment. You can learn why New Zealand is refusing to sell property to wealthy foreigners and you can read about Elon Musk’s emotional interview with the New York Times. You can also learn why investors are still buying Amazon at its sky-high valuations.
