(The opinions expressed here are those of the author, a

correspondent for Reuters. This column is part of the Reuters

Sustainable Finance Newsletter, which you can sign up for here https://www.reuters.com/newsletters/reuters-sustainable-finance/.)

By Ross Kerber

Oct 1 (Reuters) - Critics of Corporate America say too

many companies have bent the knee to U.S. President Donald

Trump, paying settlements, granting public ownership or

accepting new oversight. Executives argue such steps are

practical and necessary in the face of Trump's dramatic

expansions of presidential powers.

Now a revived regulatory proposal creates an experiment to

show how much Wall Street will stand up for its past priorities.

This week the head of the U.S. Securities and Exchange

Commission said the agency would fast-track Trump's push to

shift required corporate earnings reports to semiannually rather

than quarterly.

We've seen this movie before. During the first Trump

administration, the SEC took comments about whether to make a

similar change. Some of the strongest pushback came from fund

industry trade group the Investment Company Institute.

Among other things, the group said in a comment letter at

the time that the proposed change would hinder fund managers'

"ability to analyze company performance and make informed

investment decisions."

The ICI has not yet weighed in this time around, and declined to

comment for this article. Ditto for top fund manager BlackRock ( BLK )

; in 2019 the firm called quarterly reporting "an

important element of transparency for investors."

In their own 2019 letter T. Rowe Price ( TROW ) leaders said

reducing reporting frequency "would be disadvantageous and

disruptive for investors without sufficient counter-balancing

benefits for corporations." On Tuesday a T. Rowe Price ( TROW )

representative declined to comment on its current view.

Perhaps industry leaders want to see a formal proposal from

the SEC before taking a position. But in a social media age the

early narratives matter.

Alvin Antonio Velazquez, a corporate law professor at Indiana

University, told me it is more likely that companies want to

avoid retaliation for speaking against the proposal and annoying

Trump or his appointees.

"I'm not so sure it's keeping their powder dry so much as a

keeping-your-head-down effect here," Velazquez told me in a

telephone interview. Fund firms face pressure on a number of

other fronts including a state lawsuit in Texas, supported by

the administration, claiming fund firms violated antitrust law

through their climate activism.

The administration also has moved against diversity initiatives,

which many funds had supported, and its Republican allies are

looking to force "woke" money managers out of state pension

plans.

Funds might be triaging their efforts and lobbying

resources, Velazquez said, giving ground on reporting frequency

to defend bigger priorities.

"There's so much to be concerned about, do they really want

to take on Trump on another thing? It seems like the answer,

from what they're doing, is 'not necessarily'," he said.

TAKING EUROPE'S LEAD

Backers of the shift away from the quarterly reporting

requirement, including the CEO of Nasdaq, see it as way to

reduce the costs of publicly listing a stock. Funds' muted

opposition would bolster expectations of a U.S. change to

mandate financial reports only every six months by 2027, similar

to a norm in Europe.

Sandra Peters, senior head of advocacy for the CFA Institute,

whose members are investors, cited a study that showed a 2014

shift by the United Kingdom away from required quarterly

reporting did not raise corporate investment, as backers of the

change had hoped, and that fewer than 10% of companies stopped

issuing quarterly reports anyway.

"It's a really nice political narrative, but it doesn't do

anything," Peters said of the proposed change. Large companies

will continue to issue the reports since they are so closely

followed by analysts. "You're going to get a haircut if you

don't do it," she said.

Kurt Gottschall, a former SEC regional director now at law firm

Haynes Boone, said he expected some investor advocacy groups to

keep opposing a shift away from quarterly reporting. The Council

of Institutional Investors, which represents big public pension

funds, has already done so.

But asset management firms will face a harder decision,

Gottschall said. "The industry is still trying to figure out the

level of traction they will get in Trump's second term," he

said.