Paul Atkins, chairman of the U.S. Securities and Exchange Commission, said his agency will propose a rule change following President Donald Trump’s call to switch quarterly earnings reports to a semiannual schedule.
“I welcome that posting by the president, and I have talked to him about it,” Atkins said on CNBC’s “Squawk Box” Friday. “In principle, I think to propose change in what our rules are now, I think would be a good way forward, and then we’ll consider that and move forward after that.”
Atkins said if the rule change is approved, it will be left to companies to decide whether they switch to semiannual or stay with quarterly.
“For the sake of shareholders and public companies, the market can decide what the proper cadence is,” he said.
Current regulations require publicly traded companies to report earnings on a quarterly basis, though providing forecasts is voluntary. Earlier this week, Trump advocated switching to a semiannual schedule, saying it would “save money, and allow managers to focus on properly running their companies.” The rules can be changed by just a majority vote on the SEC, in which Republicans currently hold a 3-1 voting majority, with one open seat.
The issue has come under heated debate as opponents of less frequent reporting argue the lack of transparency would be a detriment to investors, especially retail investors who don’t have as ample resources as Wall Street institutions. Supporters say a six-month reporting schedule would free up companies to focus their businesses on a longer-term basis.
Atkins noted that foreign private issuers already adhere to semiannual reporting. Earlier this year, Norway’s sovereign wealth fund proposed switching to semiannual reporting, reasoning that lengthening the time frame would allow companies to focus on the longer term. The Long-Term Stock Exchange trading platform also has supported less frequent reporting.
“You have to realize that right now, semi-annual reporting is no stranger to our markets, foreign private issuers do it right now,” Atkins said. “There’s been a lot of discussion of the past few years about how this quarterly reporting kind of emphasizes a short term type of thinking.”
