Jay Clayton rejects Trump tweet calling for less frequent earnings reports

SEC chairman says quarterly reporting isn't likely to change

Oct 11, 2018 @ 4:29 pm

By Bloomberg News

Securities and Exchange Commission chairman Jay Clayton just tapped the brakes on President Donald J. Trump's push to let U.S. companies report earnings less frequently.

"I don't think quarterly reporting is going to change for our top names anytime soon," Mr. Clayton said Thursday at an event hosted by the Bipartisan Policy Center in Washington. "It was good of the president to raise it," he said, adding that it could make sense to ease the requirements for smaller companies.

Mr. Trump urged the SEC to study the issue in an Aug. 17 tweet, asserting that switching public companies to biannual profit reports from quarterly disclosures could cut costs and create jobs. The president's comments mirrored those of business groups, which have long argued that requiring companies to reveal their financial health four times a year fuels Wall Street's misguided obsession with short-term benchmarks.

"The president did touch on a nerve — which is 'Are people running their companies too much for the short term in response to pressures?' " Mr. Clayton said in a brief interview after the event. "We've been hearing that for a while."

Common criticisms of the current system is that quarterly reporting prompts companies to hold back on hiring and spend capital on share buybacks to meet short-term forecasts.

The issue is bipartisan. In 2015, Hillary Clinton decried what she called "quarterly capitalism" as having a negative impact on businesses and the economy. And while the debate has been long-simmering, recent flashpoints have emerged.

For instance, Elon Musk had cited quarterly earnings as a key factor in his desire to take Tesla Inc. private, saying the burden put "enormous pressure" on him to make decisions that could hurt the electric-car company over the long haul. While Musk abandoned the idea of a Tesla buyout in August, the episode triggered an SEC enforcement case over his claim in a tweet that he had secured funding for a deal.

In June, JPMorgan Chase & Co.'s Jamie Dimon and Berkshire Hathaway Inc.'s Warren Buffett urged companies to stop issuing earnings guidance. Dimon and Buffett, in a joint opinion piece published in the Wall Street Journal, said their criticism of forecasts shouldn't be interpreted as opposition to quarterly reporting.

While Mr. Clayton lauded Mr. Trump and others for raising the issue, he said that other factors like activist investing are also behind companies becoming more focused on the short term.

"I would not say the driving factor is quarterly reporting," he said.


What do you think?

View comments

Recommended for you

Featured video


InvestmentNews celebrates diversity & inclusion in the financial advice business

Highlights of the Excellence in D&I Awards, showcasing the achievements of 26 individuals and firms that are moving the needle when it comes to diversity and inclusion.

Latest news & opinion

Dawn Bennett found guilty of $20 million Ponzi scheme

Jury took less than five hours to convict the former financial adviser and radio host.

10 advisory firm employee benefits you won't believe

Some advisory firms stand out for their creative efforts to keep their troops happy and engaged. Spa retreat, anyone?

Small-cap funds take a beating

For most of the year, the sector had outperformed, but that all changed last week.

SEC commissioner Stein suggests Congress address differing broker, adviser standards

She said lawmakers may have to change 'solely incidental' language that lets brokers give advice.

Social Security and the fear of missing out

How to lower expectations when clients think they're owed a bigger Social Security benefit.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print