Trump tweeted about scrapping the current quarterly earnings report system and instead using a six-month reporting system. This argument is not new and there have been bankers and entrepreneurs loving this six-month reporting system, because they believe a longer evaluation period will help companies to focus long term gains and lose some burdens from too frequent evaluation. From companies’ perspective, they definitely hate such system with frequent evaluation. Especially Elon Musk, the founder of Tesla, wants to take Tesla private because of the current stock market reporting system.
However, six-month reporting system does not benefit the stock market. Because stocks are evaluated less frequently, investors tend to bear higher risk, since uncertainty rises when the required evaluation period is longer. When the evaluation period is lengthened, the market will be more volatile. It does not mean the market will be shifted in one direction. A stock price is likely to increase more if the company is a growth potential company. However, a stock price is likely to fall more if the company is expected to decline; while a stock price is likely to stay constant if it is a dividend stock.
Overall, increasing evaluation period could benefit the business sector while increasing the stock martlet risk (volatility).
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