What Trump's push to end quarterly reports means for banks

• Key Insight: Banks have long favored less frequent earnings reports, but investors fear losing valuable information.
• Expert Quote: Reducing reports from four per year to two "could create selective disclosure around more favorable announcements," said Stephens analyst Terry McEvoy.
• Forward Look: The Securities and Exchange Commission may take action on President Trump's demand for twice-yearly disclosures.

Some bankers have long sought relief from the time-consuming ritual of providing quarterly updates to investors. Now President Trump appears poised to deliver the six-month schedule that industry voices have advocated.

Trump wrote in a social media post Monday that, subject to the approval of the Securities and Exchange Commission, corporations should no longer be forced to report their earnings on a quarterly basis. "This will save money, and allow managers to focus on properly running their companies," he wrote in a Truth Social post.

The idea, which historically has not gotten a warm reception from investors, is not new. Trump floated the proposal in 2018, asking the SEC to study the possibility. And American businesses have only been reporting their earnings every quarter since 1970, when the SEC first started requiring it. Earlier, the cadence was every six months, as Trump has suggested is more appropriate.

"Getting rid of quarterly reporting has been a debate for decades," said Jaret Seiberg, who follows financial services policy for TD Cowen's Washington Research Group. "What's different this time is we have a president and an SEC chair who appear open to acting."

Business leaders, including major bank CEOs, have long advocated a return to the semiannual schedule, complaining that the frequent reports take up valuable time and lock companies into short-term thinking. James Gorman, who led Morgan Stanley for 13 years, has called quarterly filings "asinine."

"Why wouldn't that power and information in an organization go into what's best for clients, rather than having to report again in another nine weeks?" Gorman said at a conference hosted by Bloomberg in 2016.

JPMorganChase Chairman and CEO Jamie Dimon and Berkshire Hathaway Chairman and CEO Warren Buffett have both called for an end to providing guidance every quarter — with Buffett calling the custom "corporate malpractice" — though they have both stopped short of denouncing quarterly reports altogether.

But others say frequent filings provide important transparency for investors. Terry McEvoy, an analyst at Stephens, acknowledged that semiannual reporting could save banks "time, energy and resources." But it might also limit the information released to the public, he said — especially if the news is bad.

"How would a bank make investors aware of material events that occur … if it happened shortly into a six-month window?" McEvoy asked. "It could create selective disclosure around more favorable announcements."

As he pointed out, however, other sources of information would still be available. The banking industry is one of the more highly regulated sectors of the U.S. economy, and bank holding companies  are separately required to file quarterly financial reports, called call reports, for their banking subsidiaries.

Additionally, reducing the amount of quarterly reporting to the SEC wouldn't eliminate companies' responsibility to file Form 8-Ks to notify investors of material events, although the grounds for filing such a disclosure is somewhat subjective.

"From the banking regulators' perspective, there's not much information that's going away," Matthew Bisanz, a partner at the law firm Mayer Brown who focuses on banking regulation, said in reference to Trump's idea.

One thing that could potentially go away, however, is earnings calls — at least for the quarters in between semiannual reports.

"One of the things people point to is, 'If we lose quarterly reporting, will we also lose quarterly analyst meetings and times when investors can really ask questions and get feedback from the company?'" said Liz Walsh, a counsel at Mayer Brown who previously worked for the SEC. "Right now, those things go hand in hand."

In Trump's view, the cadence of earnings reports affects not just the competition between businesses, but also between nations.

"Did you ever hear the statement that, 'China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis???'" the president wrote in his social media post. "Not good!!!"

In fact, companies in mainland China are required to report their earnings every quarter, just like their U.S. competitors. In Hong Kong, however, businesses report every six months.

Disclosure requirements in other parts of the world vary. In the European Union, Great Britain and Australia, most companies report semiannually. But in India and Japan, quarterly earnings are the standard. In Africa and South America, the rules are different from country to country.

Proponents of the six-month calendar argue that quarterly reporting, which is a major item on public companies' to-do lists, distracts management from other initiatives and forces companies to think in "small bursts," as opposed to taking a longer-term view, Walsh said. On the flip side, some investors worry that with less material information, it's more difficult to make investment decisions.

Even without quarterly earnings reports, Seiberg said, there's still information that can be used to assess the banking industry.

"In the grand scheme of things, this is a helpful step, but it's not a seismic change," Seiberg said. "It's more just questioning, 'Is this quarterly ritual that we go through still what's best for the market?' And I think the administration is telling us that it wants to see change."