The SEC is asking for insights into the long-standing quarterly earnings reporting regime, which has come under fire from corporate America and even President Donald Trump.
On Dec. 18, the regulator issued a formal request for comment asking for market participants' opinions on how the SEC can reduce the burdens of quarterly reporting and how the current reporting framework "may foster an overly short-term focus" among investors.
In a statement, SEC Chairman Jay Clayton said the agency's rules should reflect the realities that in-depth and timely information is vital to public markets, but he also said there is a need for companies and investors to plan for the long term.
Four months earlier, Trump said in a tweet that he had asked the agency to study the impacts of moving to a six-month reporting system from the current quarterly reporting structure. Trump added that a new reporting framework "would allow greater flexibility [and] save money."
Clayton has indicated some hesitation about altering the current reporting system, saying in October that he does not believe quarterly reporting requirements will change for "our top names any time soon." However, Clayton, a Trump appointee, did signal at the same time that he would be open to exploring potential reforms for smaller companies, adding that "rarely does one size fit all."
In 2016, the SEC issued a similar request on the impacts of periodic frequency in reporting regulations. The latest development will build on the prior information the SEC has received, the agency said in a press release.
The concerns around quarterly earnings reports largely stem from executives and founders, who say that the tight windows for earnings reports cause investors to focus on near-term returns. Critics of the quarterly reporting system say that by creating that short-term focus, companies are less able to work toward their long-term goals.