2 hours ago
The Wall Street Journal reported that the US Securities and Exchange Commission (SEC) is considering allowing companies to report earnings biannually rather than quarter. Morning Brief Host Julie Hyman and Yahoo Finance Head of News Myles Udland discuss the pros and cons for companies if this proposal ever goes through.
00:00 Speaker A
As we're talking about transparency, we might as well move on to the Securities and Exchange Commission and some stuff that they are doing and that they're reportedly doing. I mean, really on the transparency side, there is the report from the Wall Street Journal that the SEC is considering no longer requiring companies to report four times a year, quarterly, that they could report two times a year. Um and this is something that um President Trump has floated before. Um this is something that some companies have have pushed for. They say
00:30 Speaker A
those regulations, the cost of reporting every quarter is just so onerous, um for them to do. In Europe, they only um are required to report twice a year. So it would be, you know, because we have been talking so much about wanting to emulate the European regulatory system and economy, why not follow them on this particular item?
00:54 Speaker A
Um, you know, I think like we as journalists, it's obviously helpful to have a company report four times a year. I understand the allure. Not so much like the regulatory burden of reporting four times a year. I get the argument that, you know, this causes companies to not and the market to not focus as much on the long-term, they focus too much on the short-term. I get that argument.
01:17 Speaker A
I I think there's I'm I'm I would be sad if we if companies didn't report four times a year.
01:23 Speaker B
Well, it seems pretty clear that the rule is going to change. Right? I mean, the report is that there's likely to be, um, you know, God, what is the word? The they formally put out the process, you know, call for comments essentially, you know. Um solicitation, I think is um it might be the right word. So that's going to happen and it feels like this is going to be a change that happens.
01:50 Speaker B
Now, what as I've thought about this, I sort of don't think every company is going to follow the new rules right away. Like I think a lot of companies
02:00 Speaker A
No, they won't. Or or ever. There will still be companies that be companies that report quarterly. For sure.
02:04 Speaker B
Yeah, because I think that for and look like for all the downside and you know, I've heard, you know, I'm sure we've all heard CFOs talk about this. You report one quarter, you basically take a week, you know, you can go to the lakehouse or whatever. You start reporting the next quarter like right away.
02:22 Speaker B
Like you all of a sudden, uh move into gathering all the data you need to, etc, etc, etc. You spend four weeks before the call, prepping your comments, etc. Like it is a huge burden on executive teams. On the other hand, I think that well-run businesses uh have enjoyed incredible leeway from the markets and seen tremendous returns for their shareholders, um you know, and their customers and businesses, you know, executives, etc.
02:54 Speaker B
as a result of being public companies and reporting four times a year and telling the market all these great things happening within their business. So, companies may choose not to, you know, do four times a year if they don't have to, but I sort of suspect that it will not immediately go away and I kind of think it'll end up being an advantage for some companies to continue to come out with the report.
03:15 Speaker A
Yeah, I think that's right. And this argument that like, oh, companies don't want to come public because they're going to have to report four times a year. Um, I I I think you're right that some companies are going to tell on themselves by not reporting. Like, you know who's going to be overjoyed to not report earnings four times a year? Elon Musk.
03:38 Speaker B
So, I knew you were going to say that.
03:39 Speaker A
It's, he's going to love it. Are you kidding?
03:44 Speaker A
Alex Karp, like these people who, the the, I guess what I'm saying is what I like to think of as the faith-based stocks. And that's not to say that these companies, I mean, Palantir obviously has shown real actual growth.
04:02 Speaker A
But like they don't need to report four times a year to, you know, to drum up the the base.
04:11 Speaker B
Well, here's a, I guess here's a question. We'll see what the rule, what it comes out with. Could you do a quarterly report or an interim report that it doesn't have the same full auditing. It's not the same breadth, right? Because I think that to use those two executives as an example, while they both like to complain and have complained and often, almost every quarter complain about the, you know, the ritual,
04:40 Speaker A
The haters?
04:41 Speaker B
No, but they they do like the platform. They understand as much as anybody the value of having that communication channel. Um so I think they'll certainly have the call. They might have more calls than that.
04:44 Speaker A
They do like the platform. So maybe they'll still have a call every quarter. Sure.
04:55 Speaker A
Well one of those one of those guys has a communication channel that he owns that he uses a lot. But but yes, to your point, it's a different kind of tone that he strikes and it's a different kind of communication with investors. Um the other thing that the SEC is doing, it's not waiting to do, it is doing, uh Paul Atkins, um they issued an interpretation. um and this has to do with cryptocurrencies and basically they now are saying there are five different
05:32 Speaker A
types of crypto tokens. Digital commodities, digital collectibles, digital tools, stable coins, and digital securities. Um and federal securities laws only apply to digital securities. Is that clear? Are we clear now? Is everything okay now?
05:54 Speaker B
Crypto was more fun when it was just talking about the prices going up. That's it.
06:01 Speaker A
Well, I mean that the that's the the funny thing about that is like for years, this is what the industry has wanted. They're so excited about this. They're so excited that Paul Atkins is there and they feel like they have an advocate at the SEC who's making these new rules. But to your point like, um crypto being more institutionalized probably means at some point it'll get more boring and not as many people like
06:10 Speaker B
Yeah.
06:33 Speaker B
I think we're there.
06:34 Speaker A
I think we're there too, right? We're you know, yes, we've gotten a little bump in Bitcoin since the war began, but like it's still a sideways move, right?
06:47 Speaker B
Yeah, I think, uh, you wanted to become just another asset. Now you are. Be careful what you wish for.
