An irony is that stock market success is often held up as a charity grant for the 1 percent. But not by Trump, who regularly features the Dow Jones Industrial Average in tweets trumpeting his economic policies. While the president may view reducing the reporting burden as deregulation, much was made Friday about how the policy would partially align him with liberal firebrands like Elizabeth Warren.
Trump cited job creation as a potential motive for the tweak. But the U.S. economy has added more than 14 million jobs over the last nine years and the unemployment rate is hovering near an 18-year low. Combined expenditures on fixed investments jumped 24 percent in the second quarter, the fastest rate in seven years.
Could the plan hinder more than it helps?
“Given the limited level of financial disclosure required of public companies today, any reduction of disclosure requirements would be detrimental to investors,” Glen Kacher, who founded the hedge fund Light Street Capital Management, said in an email. “Reducing the frequency of corporate reporting would significantly reduce investor’s ability to assess the health of public companies in a timely fashion.”
Accounts of corporate myopia are easy to find. A perennial target is share buybacks, by some estimates on track to reach a trillion dollars in 2018, the highest ever. Others cite the market’s frenetic focus on short-term goals as a reason the number of initial public offerings has fallen by 75 percent since the mid-1990s.
Then again, the six biggest companies in the world and eight of the top 10 are American. Two have gone public since 2000 -- Alphabet Inc. and Facebook Inc. -- while three others listed after 1980: Apple Inc., Microsoft Corp., Amazon Inc. The S&P 500 is in the middle of a bull market that by some definitions will be its longest ever as of this week.
In a world where the U.S. and China and Europe are throwing daily mud at each other on the topic of trade, some analysts wondered if the solution is really giving less timely information to investors. Companies have used earnings calls to relay how the trade dispute could affect their financial results, information that would have been delayed or perhaps not even addressed under a bi-annual disclosure schedule, said Sandy Peters, head of financial reporting policy at the CFA Institute in New York.
“If there are events that create financially relevant consequences to a company, six months is a long time to wait to find out what those consequences are,” Peters said. “We think it creates a lot of squishiness about what gets released over a long period of time.”
This article provided by Bloomberg News.