August 17, 2018 / 1:34 PM / 4 months ago

Instant View - Trump asks U.S. SEC to mull half-year corporate filings

(Reuters) - U.S. President Donald Trump said on Friday he has asked the U.S. Securities and Exchange Commission to study the impact of allowing companies to file reports with the financial regulator every six months instead of every quarter.

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STAN SHIPLEY, MARKET STRATEGIST, EVERCORE ISI, NEW YORK:

“Corporations have long complained about the costs of quarterly filing and that tends to make their attention very short term. So people say that if they get away from quarterly filings and got to somewhat longer filings, that would help companies have a longer-term perspective.

“Unfortunately, research shows that’s not exactly true. Most research suggests that companies that are well-managed and have a longer-term perspective do better anyway and are able to manage their quarterly reports. Furthermore, you give investors less information on what’s going on so there’s a risk of injecting volatility in your stock price because investors are not guided the right way. You’re more likely to surprise investors when you’re reporting just twice a year instead of quarterly.”

KIM FORREST, SENIOR PORTFOLIO MANAGER, FORT PITT CAPITAL GROUP, PITTSBURGH

“Not happy with that at all … I believe that just because you have to report quarterly doesn’t mean you should have to act quarterly. If you can’t explain your process and your goals as a company and adequately say why the results came out the way they did and you feel compelled to play some sort of accounting games to make it seem like every quarter is better than the last, this is a stock I am not interested in owning.”

“Shareholders deserve to have a report every quarter on how the company is doing.”

“I don’t believe companies should act in the short-term, but I also don’t believe that just because you report quarterly means you are acting in the short term to make things come out nice.”

ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY FBR, NEW YORK

“There’s long been a push for less short-termism in running publicly traded companies and that’s where the debate begins. Do you run a company in a more efficient manner if you’re not thinking about having to talk about your results every 90 days?”

“The difficulty in making better long-term decisions away from a quarterly reporting cycle certainly stands out as being beneficial, so we’ll see how it develops. It’s not something that can be done with an executive order, but it’s certainly a conversation that started years ago and one that is certainly getting some traction in the marketplace today.”

“It’s a long-term issue that has been around certainly for years, and the whole argument coalesces around better corporate planning for the future, making better long term decisions if you’re not strapped with reporting our results every 90 days. There is credible possibility that you end up making short-term decisions more than long-term decisions because of the nature of your reporting cycle. I think there are studies that prove that that’s probably not a positive.”

“The other side of that argument would be that the ability to know how things are actually going at a company on a regular basis, you probably are disenfranchised especially as an individual versus an intuitional investors that probably has the ability to get access to management on a more frequent basis.”

RANDY FREDERICK, VICE PRESIDENT OF TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS

“He is not the first person to bring this up, It’s been talked about for at least a decade.”

“I don’t think it’s a bad idea. What I think is the challenge is that it will be a hard to get people to change to do that, because investors and certainly shorter-term traders want that information. They want to know how companies are doing on a quarterly basis.”

“In theory, it should probably lower market volatility, because the most volatile times of the year are when quarterly earnings start coming out. If you had that only twice the year instead of four times a year, overall market volatility would decline.”

“The main thing is that this is a big, gigantic fundamental shift in the way business works in this country, in the way capital markets work. It would be like trying to turn around the Queen Mary in a swimming pool.”

“This is not something he can change with an executive order.”

SAL ARNUK, PARTNER, CO-FOUNDER, THEMIS TRADING, CHATHAM, NJ

“Certainly there are drawbacks to an over-focus on short term results. The alternative is not a pretty picture. Who wants to go back to the American stock exchange in the 1920s and does anyone doubt that we have a premium valuation in U.S. markets due to more transparency and disclosure? There’s a greater chance what you see and what companies tell you is the actual truth in the U.S.”

“In the United States we enjoy a healthy premium in valuation versus many other global economies. Perhaps a large part of that premium is due to the fact that we have much more transparency.”

MARKETS:

STOCKS: S&P E-Mini futures ESc1 extended modest losses then steadied and were down 0.20 percent

TREASURIES: The yield on the U.S. 10-year note US10YT=RRwas down fractionally at 2.8587 percent. The two-year note yield US2YT=RR was at 2.6121 percent

DOLLAR: The U.S. dollar index .DXY was off 0.37 percent

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