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Investors welcome Trump move on quarterly reporting

Investors welcome Trump move on quarterly reporting
Credit: Carlos Barria/Reuters

Donald Trump’s bid to force companies to abandon the practice of issuing quarterly financial statements has been welcomed by the Investment Association (IA).

Mr Trump tweeted he has asked the US regulator, the Securities and Exchange Commision (SEC) to investigate whether it would be in the interests of the US economy to shift to half yearly reporting.

The US president said he had taken this action after speaking with "some of the world's top business leaders" who told him it would "make business (jobs) even better" because it would save money and allow for greater flexibility.

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Chris Cummings, chief executive of the Investment Association said: "A move away from quarterly reporting would allow companies to lift their head up, move away from constantly focusing on short-term market expectations and instead manage their businesses with greater focus on how to build sustainable, long-term success and invest in a way that boosts productivity.  

"The challenge for many global companies, including a number in the FTSE 100, is that the SEC rules in the USA require them to report quarterly in order to list in America. Asking the SEC to study the effect of quarterly reporting, with a view to moving to a longer-term model, is a significant and positive intervention by the president.

"Moving away from mandatory quarterly reporting would give companies greater flexibility to focus on long-term investment rather than short-term targets. We look forward to working with the SEC on this important development in corporate governance."

The UK abandoned the requirement for quarterly reporting in 2014, which led to many companies ditching the practice, encouraged by the IA.

One vocal critic of quarterly reporting has been Tesla chief executive Elon Musk, who told employees recently the "enormous pressure" of this practice was behind his decision to look into taking the car company private.

david.thorpe@ft.com