Should companies report only twice a year?

Rob Armstrong (0:06)

Pushkin.

Katie Martin (0:09)

People of the internet, listen up, because Donald Trump might have had a good idea. The other day, pretty much out of nowhere, the president declared that he wanted to see an end to what we call quarterly reporting requirements. Right now, listed companies in the US release their earnings and talk about how their business is doing every quarter, so four times a year. If they did that, say, just twice a year, maybe they'd have more time to concentrate on their business and spend less time pulling together boring reports. Maybe investors would think more long term. Now, this idea has been kicking around for years, honestly, and nothing has ever really happened with it. So today on the show, we're asking, is Trump actually on to something here? This is Unhedged, your friendly markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist at the FT in London, England, which is playing host to Mr. Donald J. Trump with all the pomp and ceremony we do so well. Say what you like, but we are good at this. And I'm joined down the line from New York City by another large American, first Sea Lord of the Unhedged newsletter, Rob Armstrong. Rob, do you regret that we did not lay out the red carpet for you when you came to London the other week?

Rob Armstrong (1:31)

It stung a little bit, that there was no state dinner. I did not meet a single member of the royal family, even like a minor royal.

Katie Martin (1:38)

No, sure.

Rob Armstrong (1:39)

It's like I'm, you know, it's just like a trivial person in the eyes of your country. It's very difficult.

Katie Martin (1:44)

There were no like trumpets or scarlet jackets, or...

Rob Armstrong (1:49)

No.

Katie Martin (1:49)

None of that.

Rob Armstrong (1:50)

No.

Katie Martin (1:50)

It's an absolute outrage. Terrible. Let's start at the beginning, shall we? A very good place to start. Like, why did Trump say this? This feels a little bit random. What's going on?

Rob Armstrong (2:02)

Well, a lot of random things come out of the president's mouth, and I don't know how this got to the top of his brain space such that he blurted it out. And Trump, as you know, does say a lot of stuff he doesn't follow up on. So it may... none of this may amount to anything. It'll be a wrangle to make this change, because we've been a quarterly reporting market in the United States for decades now. But all of that aside, I think this is a fascinating topic that kind of gets to the heart of how the stock market works in a funny way. And so a lot of issues like long-termism versus short-termism, how much information do investors need to make good decisions, how timely should that information be, etc. It brings up this kind of rich set of questions about what we're all doing here in the first place.

Katie Martin (2:59)

Yeah, something that sounds quite simple actually is quite potentially profound. So as you say, look, the president says a lot of things. He posts a lot of things on social media. He doesn't always do all of the things. Is this a thing that he can actually do?

Rob Armstrong (3:16)

Katie, you've put me in the position of uttering the sentence that makes my tongue burn every time I say it. And that sentence is, I don't know.

So quarterly reporting in its current form came mostly from the big financial regulation law of the United States, the Post-Crash Securities and Exchange Act of 1934 They both established RSEC, the Securities and Exchange Commission, which is our main financial regulator. That act says the law gives the SEC the authority to require quarterly reports of companies. I don't know if that means the law has to be changed or if he can just, Trump can just tell the SEC, tell the companies to do it twice a year now. So maybe we'll get a lawyer on the show who will parse that out for us.

Katie Martin (4:13)

Let's get a securities regulation lawyer, pointy hat on the show. It will be very interesting.

Rob Armstrong (4:20)

But yes, that's the limits of my knowledge, I'm afraid.

Katie Martin (4:25)

Let me ask you something though. So if the point that Trump is making here is that pulling together these quarterly reports is a giant pain in the ass, which I can imagine it probably is a giant pain in the ass, why not get AI to do it? Why do you have to get rid of it? Why can't you just make a clever computer do it? Just like read your accounts and then spit out a report automatically. There's a clever idea.