Quarterly reports – valuable transparency or "Not good!!!" as Donald Trump says?

Administrative burdens and obligations are a thorn in the side of US President Donald Trump. Or, as he recently summed up regarding the obligation to quarterly reporting: "Not good!!!"

Quarterly reporting is now a widely discussed topic. On Truth Social, Trump announced that quarterly reports for listed US companies should be abolished. Companies should only report every six months so that management has time for proper leadership and a long-term perspective.

What is the substance of this proposal, which at first glance makes perfect sense? After all, companies benefit from all the simplifications and reduced bureaucracy. Does a change in practice make sense for Swiss companies that report quarterly?

Less effort...

The arguments in favour of half-yearly reporting are obvious:

• Quarterly reports consume time and therefore money. The effort involved is particularly high in the case of US-filings, which are strictly standardised in terms of content.
• At the same time, quarterly reports usually involve other activities that challenge the organisation. These include simultaneous webcasts, investor meetings and roadshows, or even town hall meetings with the associated preparation of presentations, Q&As and training sessions – always tailored and perfected for the relevant target group.
• The results should convince the market. This can lead to management's focus shifting away from long-term strategy and towards these three months. CEOs and CFOs are often accused of short-term, opportunistic behaviour.

... less transparency

There are also some arguments in favour of quarterly reporting:

• Those who only publish figures twice a year are less visible in the media and to investors. Small and medium-sized companies in particular, which rarely have new products or other news to report, can thus be sidelined in the market.
• Similarly, information asymmetries could arise to the detriment of smaller investors, as the longer interval between reports leads to greater opportunities for insiders.
• Closely linked to this is a higher demand for one-on-one meetings with institutional investors or fundamental analysts in order to bridge the large gaps between reports. The effort involved in such one-on-one meetings could ultimately be greater.
• Those who remain silent for a long time leave the field to others. This could damage their market perception. Especially in times of crisis and special situations, where trust needs to be built through transparency and (quarterly) performance, this leads to an information gap.
• Certain sectors, such as the financial industry, naturally demand greater transparency. This should not be ignored.

The UK as a practical example of long-term management orientation

The United Kingdom provides a practical example. There, the obligation to report quarterly was abolished in 2014. As James Mackintosh, market columnist for the Wall Street Journal, recently explained in an article, studies have shown that companies that switched to half-yearly reports did not develop a stronger long-term mindset. Investment and research spending remained unchanged. This undermines one of the main arguments against quarterly reporting, commented MIT lecturer and former fund manager Robert Pozen in the same article.

The current situation also shows that fewer reports do not automatically mean more long-term thinking. Big Tech is currently investing hundreds of billions in artificial intelligence, despite quarterly pressure. Big Oil also continues to build billion-dollar projects, even though it reports quarterly.

The idea that half-yearly reports automatically promote a long-term perspective is questionable. A truly long-term perspective means thinking in terms of three, five or even ten years. Half-yearly reporting cannot contribute much to this. Transparency, on the other hand, can.

Swiss solution as a pragmatic middle ground and recommendation

On the SIX Swiss Exchange, only half-yearly reports are required. Many companies, even those not listed in the US, opt for an interim solution based on quarterly reporting. They do not report complete financial statements for the first and third quarters, but rather segment revenues or order intake, for example. This also provides an opportunity to confirm guidance updates or comment on the status of important projects. Ad hoc publicity applies to significant events such as negative or positive profit warnings and acquisitions. This allows companies to provide investors with regular guidance without the full expense of quarterly financial statements.

If quarterly reports are no longer mandatory for Swiss companies on US stock exchanges, we recommend the above combination as an alternative. It creates the necessary transparency and maintains a good degree of flexibility. This is particularly useful for companies that are less exposed but where a high level of transparency is required or whose shareholders are accustomed to US reporting standards.