Treasury Secretary Scott Bessent stated that Trump's proposal for companies to report semi-annually instead of quarterly would be good news for investors.
Trump proposed eliminating quarterly earnings reports in a Truth Social post on Monday, saying this would allow corporate executives to focus on long-term goals rather than short-term metrics.
"Trump recognizes that our public markets are shrinking, whether in the UK or the US, and this could be a way to restore and cut costs for public companies without harming investors," Bessent said Tuesday.
Meanwhile, many companies choose to remain private rather than go public, partly due to the increasing costs of quarterly reviews and compliance. The number of US public companies has declined from over 7,000 in 1996 to fewer than 4,000 in 2020.
Trump also stated that eliminating quarterly reports would align the US with many foreign jurisdictions that already have semi-annual reporting systems.
"Have you ever heard the saying, 'We run our company by the quarter?' Not good!!" Trump said.
In the UK and EU, companies release earnings reports semi-annually, but can also publish quarterly reports if they choose.
However, some investors have previously warned that quarterly earnings reports make corporate financial conditions more transparent and regular, helping to protect their interests.
The Council of Institutional Investors (CII), an organization representing pension funds that invest in stocks, believes that the lack of quarterly reporting may not "adequately" protect investors.
Foreign companies planning to list in the US under the foreign private issuer program, such as Arm and Spotify, are also not required to report quarterly, though some companies do so voluntarily.
CII stated that the many exemptions currently enjoyed by foreign companies in the US may "undermine" effective corporate governance.
Would this make the US more attractive?
Over the past decade, European exchanges have seen many prominent companies leave their home markets to list in the US, due to higher valuation levels among US peers and certain regulatory benefits.
Abandoning the quarterly reporting system could make US markets more attractive to European companies, as it would reduce compliance costs for companies considering abandoning the quarterly reporting system.
Mike Bienenfeld, a lawyer at Linklaters who specializes in SEC compliance, said: "I don't think this is a game-changing development, but it would certainly become a comprehensive consideration factor for companies thinking about whether and how to list in the US."
When asked whether this move would make the US a more attractive destination for European companies, the Treasury Secretary said: "Being popular is difficult."
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