President Trump called for an end to quarterly earnings reports in a tweet early Friday morning, instead advocating for a six-month system that he said would allow for greater flexibility for businesses.
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“Making the United States business friendly is key to job growth!” he wrote in a second tweet.
Trump said he reached out to the U.S. Securities and Exchange Commission and asked them to study potential implications of a system change.
FOX Business reached out to the Securities and Exchange Commission for comment.
In June, nearly 200 business moguls from the Business Roundtable – including JPMorgan Chase Chairman and CEO Jamie Dimon and Berkshire Hathaway Chairman and CEO Warren Buffett – urged companies to shift away from releasing quarterly earnings guidance, which they said is harming the economy.
According to these CEOs, short-term earnings guidance can stunt economic growth by shifting companies’ investments away from technology, hiring and research and development in order to meet quarterly earnings forecasts, which too often can be affected by factors outside of a company’s control, like commodity-price fluctuations, stock-market volatility and the weather.
“The pressure to meet short-term earnings estimates has contributed to the decline in the number of public companies in America over the past two decades,” Dimon and Buffett wrote in an op-ed that appeared in The Wall Street Journal.
In a 2017 paper, a Boston University economics professor, Stephen Terry, studied the effects of short-termism on investment, and found that companies that just meet their earnings forecasts tend to exhibit lower growth in research and development -- suggesting that companies intentionally hold off on investing in those areas to meet quarterly numbers.
Terry concluded that this system ultimately lowers economic growth in the U.S. by .01 percent annually.
This is a developing story. Check back for updates.