President Donald Trump’s plan to switch from quarterly to bi-annual business earnings reporting has drawn harsh criticism from Senator Elizabeth Warren. The Massachusetts Democrat told Yahoo Finance that the move would impair control of publicly traded corporations and deny investors access to important financial data.
The plan of President Trump
President Trump recently made the case that profit reports ought to be submitted just every six months. He asserted that the action will lower compliance expenses for companies and motivate leaders to put long-term expansion ahead of immediate outcomes. Since 1970, the Securities and Exchange Commission (SEC) has mandated that publicly traded companies report their results every three months. Trump’s approach coincided with the SEC’s announcement that it would examine his idea. The agency has indicated that it might give the concept priority, even though any modification would need official permission.
Compromising openness
Warren rejected Trump’s logic, arguing that the president had political rather than economic motivations. “Transparency is undermined,” she told Yahoo Finance. “That’s the main idea here.” She said that Trump “knows he’s in trouble on the economy, so he doesn’t want real numbers reported in any of the economic areas.” Warren went on to say, “This is the standard Donald Trump trick, and that is, if you don’t like the numbers, then try to get them out of sight,” alluding to Trump’s dismissal of the commissioner of the Bureau of Labor Statistics following a poor employment report. And he is attempting to accomplish that.
The White House resists
White House spokesperson Taylor Rogers responded by focusing on Warren’s prior assertions of Native American ancestry rather than criticizing the policy. Rogers told Business Insider, “Pocahontas is the last person who should be giving advice on SEC requirements.” “She was unable to even be honest about her own past!”
The controversy around quarterly reporting
Since it provides investors with frequent updates on company performance, quarterly reporting has long been a pillar of the American financial system. Citing lessened regulatory requirements, the European Union discontinued the practice in favor of biennial reporting in 2015. In the US, experts are still split, though. While some caution that investors might have to wait longer between announcements, others see possible cost savings and less immediate pressure on executives. Warren emphasized that stockholders would be left in the dark if there were fewer reports. “It is not necessary for investors to view less information about the businesses they are funding,” she stated. “Those businesses are using the money of investors, after all.”