President Donald Trump thinks the habit of forcing companies to report earnings at three-monthly intervals is “Not good!!!”. He is probably right. But since he last complained about quarterly reporting in 2018, the debate has moved on. The alternative will soon be not less disclosure, but much more.
Plenty of people abhor the tradition of the mandatory quarterly report, but they are often those who have to produce it, or are measured against it. Executives from JPMorgan chief Jamie Dimon to Berkshire Hathaway’s Warren Buffett have griped about the practice, claiming it promotes short-termism and diverts resources that could be better used. Private equity groups tout the benefits of delisting from public markets as a way of avoiding exhausting red tape.
On balance, though, more information is better. The more investors know, the lower a company’s cost of capital ought to be. The UK is often held up as an example of a country that successfully scrapped forced quarterly reporting, moving to twice yearly reports instead, but many companies still issue quarterly trading statements.