Business Insider tells the global tech, finance, stock market, media, economy, lifestyle, real estate, AI and innovative stories you want to know.
Wall Street could be on the verge of a major change that could have implications for publicly traded companies and their investors.The Wall Street Journal reported on Monday that the US Sec urities and Exchange Commission is considering eliminating the quarterly reporting requirement for publicly traded companies.
According to the Journal, the agency is preparing a proposal to give firms the option to report earnings twice a year.This plan was originally floated by President Donald Trump last September. He said at the time that such a move would allow companies to save money and focus on management rather than compiling statements for investors.As the plan now appears to be gaining traction, market pros are mixed on the idea.Here's what finance sector pros told Business Insider about how the move could affect markets.Moses is one of the handful of traders made famous by "The Big Short." He told Business Insider he sees both pros and cons from the move."I am always for more transparency than less, but the good corporate actors who tend to underpromise and overdeliver will be fine," he said. "What does concern me is that this is happening at the same time that the SEC/DOJ/CFTC is becoming more hands-off as it relates to enforcement and that might allow some bad actors to use less frequent reporting to their advantage at the expense of shareholders."Moses also predicted that as AI accelerates, wealth managers and analysts will come to rely more on their own research and less on earnings reports.Halter, who serves as director of research at Carnegie Investment Counsel, said that it is common for European companies to report earnings only twice a year, and that the move could remove a burden for some firms."Corporate costs will go down, given the burden that reporting entails. Company management teams spend a lot of time managing the messaging on a quarterly basis when they could be focused on business fundamentals, he said.He added that a move to a lower reporting cadence could also dispel some of the volatility around earnings."US investors have come to expect and anticipate quarterly results. However, it has also resulted in a game of trying to manage and beat expectations, which has resulted in volatility as traders 'bet' on which way the reported results and future guidance are received."Otto, the head of research at financial intelligence provider S&P Global Visible Alpha, highlighted several issue that the proposed rule change could pose for investors.In particular, she said a move toward a twice-yearly reporting schedule would lessen transparency, but she also agreed with the idea that it could allow for more focus by management on running their companies."The removal of quarterly earnings may align more to longer term investors," she said. "However, there would likely be less transparency around a company's fundamentals and outlook. It may also remove some of the quarterly volatility and enable management to focus on managing and growing the business."A US investment and options analyst at trading platform eToro, Kenwell thinks that ultimately, eliminating quarterly earnings requirements would benefit investors in proven, high-performing companies but increase risk for more speculative stocks."This proposal has mixed implications," he said. "More time between reports gives management added runway to focus on long-term execution instead of managing to quarterly expectations. From a long-term investing standpoint, that is positive."However, he said that on the other hand, less frequent earnings data will diminish transparency between reports and raise the potential for "questionable behavior" by companies.Versace is the portfolio manager at TheStreet Pro. He noted that his team is divided over the proposal."First, it would remove the focus by more than a few companies about 'managing for the quarter,' which would, in our view, not be a bad thing," he said. "Second, the argument that less reporting would help boost the number of public companies in the US is questionable, but odds are that investors would want to see even more investor conferences and management presentations than we have today."Wall Street veteran and CIO of investment firm Navellier & Associates, Navellier told Business Insider that he isn't worried about what the SEC is proposing, in part because he doesn't see any major changes coming and that companies will stick to the current schedule."I suspect most US companies will keep reporting quarterly," he noted. "I have no problem with the SEC proposal. It will just help many companies conform to 6-month reporting that is common in Europe and elsewhere."
Stocks Stock Market Earnings Regulation SEC Economy
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Between Iran and a Hard Place: Wall Street Weighs War and Stagflation RisksMarket Analysis by covering: . Read 's Market Analysis on Investing.com
Read more »
Wall Street Is Already Betting on Prediction MarketsAs the legal war over how to regulate prediction markets rages on, financial institutions are embracing the industry anyway.
Read more »
Harrisburg announces new street closures amid Broad Street Market constructionThe City of Harrisburg has announced new road closures as crews continue to rebuild the Broad Street Markets brick building, which burned down in a 2023 fire.
Read more »
Wall Street Just Put Zohran Mamdani on NoticeThe bond market is putting the ambitious new mayor in a difficult position, writes columnist Errol Louis.
Read more »
21 Jump Street's Unfinished Business: Channing Tatum Still Hopes for '23 Jump Street'Channing Tatum and Jonah Hill's hit comedy '21 Jump Street' may see a return. Tatum expresses desire for a third film, citing bureaucratic hurdles as the primary obstacle. The article details the film's success, the sequel, and potential future projects.
Read more »
Trump 'Too Busy Siding With Wall Street,' Says Warren as US Credit Card Debt Crisis ExplodesJake Johnson is a senior editor and staff writer for Common Dreams.
Read more »