Should We Eliminate Quarterly Earnings Reports (Or, At Least, Make Them Optional)? Part 1

The argument from managerial short-term bias

The WSJ today reported that:

President Trump said companies should no longer be required to report their earnings on a quarterly basis, an idea he explored during his first term that has gained traction recently. …

Instead, Trump argued, companies should report their earnings every six months. “This will save money, and allow managers to focus on properly running their companies,” Trump wrote on Truth Social on Monday.

His proposal echoes one from the Long-Term Stock Exchange, which said last week it plans to petition the Securities and Exchange Commission to eliminate the quarterly reporting requirements. LTSE instead proposed giving companies the option to share results twice a year.

There’s a lot to unpack here, so this issue will be the subject of my next several posts.

Today, however, I want to focus on Trump’s argument that eliminating quarterly earnings reports would “allow managers to focus on properly running their companies.”

One assumes that Trump is referring to the oft-repeated charge that quarterly earnings reports drive managers to have a short-term focus that is detrimental to the corporation’s long-term success. Which raises two questions. First, is managerial short termism a problem? Second, if so, are quarterly earnings reports a major contributing factor?