US Treasury Secretary Scott Bescent said President Donald Trump’s proposal for companies reporting on six months is good news for investors.
Trump proposed scrapping quarterly revenue reports on Monday’s Truth Social Post.
“President Trump is aware that our public markets are sluggish, whether it’s the UK or the US. This could be one way to reclaim costs and reduce costs to public companies without harming investors,” Bescent told CNBC in London on Tuesday.
Scott Bessent, US Treasury Secretary of CNBC Studios in London.
Scott Bessent, US Treasury Secretary of CNBC Studios in London.
Many companies choose to be held personally rather than publicly listed due to increased quarterly scrutiny and compliance costs and increased compliance costs. The number of publicly available companies in the US has dropped from over 7,000 in 1996 to under 4,000 in 2020.
Trump also suggested that discarding the quarterly report would coincide with many foreign jurisdictions that the United States has already followed the six-month reporting system.
“Have you heard of a statement that China has a 50-100-year view on managing its company, while it runs a company quarterly?” Trump said.
Companies listed in China are reported quarterly, while stocks on the Hong Kong Exchange are reported every six months.
In the UK and the European Union, businesses also report on a six-month basis, but if you choose, you can issue a quarterly report.
However, some investors have previously warned that quarterly revenue reports can help protect profits by making the company’s finances more transparent and regular.
The CII, a group representing the Institutional Investors Council, or the equity-invested pension fund, suggests that a lack of quarterly reporting may not “sufficiently” protect investors.
Foreign companies listed in the US under a foreign private issuer scheme; arm and SpotifyThey are also exempt from reporting quarterly, but some people voluntarily report each quarter.
The CII says many of the exemptions foreign companies currently enjoy in the US could “undercut” their current effective corporate governance.
Can it make the US more attractive?
On European exchanges, many well-known companies have left listing home markets in the US over the past decade, attracting them to the higher rating levels and some regulatory benefits achieved by their American peers.
Leaving away from quarterly reporting could make the US market even more attractive to European companies, as it reduces compliance costs for those considering this move.
“If this is implemented, I don’t think this is a game-changing development, but it will definitely be a consideration for companies that are thinking about whether or not they want to list them in the US and how they want to list them,” said Mike Bienenfeld, a lawyer specializing in SEC compliance at the law firm’s link raider.
When asked whether the move would make the US even more attractive destination for European companies, the Treasury Secretary said “it’s difficult to be popular.”
