What could Trump’s plan to scrap quarterly earnings reports mean for markets?

The first area of the industry likely to be impacted, Phipps says, are the US hedge funds that make their margin by trying to front run guidance based on their own independent research methods. That operating style, which Phipps characterizes as “incredibly short-term,” may be changed by the lack of a quarterly event that makes or breaks a hedge fund’s prediction. That could, he notes, help dampen the volatility around those quarterly earnings, but that volatility may be further concentrated around the two points in the year when companies would be reporting earnings.

Because corporate credit bond covenants are also tied to earnings releases, Phipps notes that credit markets might prove more challenging to navigate with fewer periods of transparency.

The possible shift in reporting timelines may prove a relief to C-Suite executive teams. As earnings reporting has become more intensive over the past decades, Phipps notes that there has been a significant burden placed on management teams to deliver these numbers on time. Less frequent reporting could help alleviate some of that process burden.

More speculative sides of the market may benefit from fewer earnings reports as well, Phipps notes. He explains that companies trading like meme stocks, with little underlying data to back their exploding valuations, might run hotter for longer without the earnings report to function as a reality check for investors. Moreover, less earnings reports may leave more space for promotional press releases and incomplete voluntary reporting that makes a company look to be in better health than it is.

Growth companies with a greater focus on R&D may also benefit in a less frequent reporting environment, Phipps notes. That doesn’t just have to be zero revenue companies, but software companies with high R&D budgets may have more time to see their investments in technology deliver returns between reporting events. Even in the energy sector, exploration and production companies could see a windfall from a slightly less short-term view taken by investors.