For more than half a century, public companies in the United States have followed a simple rule: report financial results every three months. These quarterly reports give investors a consistent window into how a company is performing, how management is executing, and whether the business is meeting expectations.
The U.S. Securities and Exchange Commission is proposing a notable change. Instead of requiring quarterly reporting, companies could choose to report earnings just twice a year. The thinking behind the proposal is that quarterly reporting can encourage short-term decision making at the expense of long-term planning. It would also give companies more flexibility to choose a reporting cadence that fits their business, while reducing the time and cost associated with preparing quarterly results.
The logic is compelling, and most CEOs and CFOs would likely welcome the opportunity to focus more on operations than on reporting. It’s also worth noting that the U.S. is somewhat of an outlier. In the United Kingdom and across much of Europe, companies typically report on a semiannual basis. The SEC’s proposal would move the U.S. closer to that global standard.
However, from our perspective, we strongly favor quarterly reporting. These regular disclosures support efficient price discovery by ensuring investors receive consistent, timely information at the same time, a principle reinforced by Regulation Fair Disclosure. This transparency serves several important functions. It helps investors more accurately price risk, deters fraud by keeping companies under regular public scrutiny, and lowers the cost of equity capital by reducing uncertainty. Conversely, a shift to semiannual reporting would create longer periods in which insiders possess material nonpublic information, increasing the risk of insider trading and reducing overall market efficiency.
The U.S. stock market is roughly $74T, more than the next 20 countries combined. While innovation and entrepreneurship are often cited, clear rules, consistent reporting, strong disclosure standards, and strict SEC oversight are an underappreciated reason why U.S. markets are so large relative to the rest of the world. Public companies, not just in the U.S., recognize the value of transparency. That likely explains why, despite the UK’s semiannual reporting requirements, 30 of the top 100 companies by market cap still choose to report quarterly.
While semiannual reporting could offer some benefits at the margin, particularly for smaller companies, and may help explain why more businesses are choosing to stay private longer, we believe those benefits are outweighed by the loss of transparency.
Quarterly reporting has long been a cornerstone of U.S. markets, supporting efficient price discovery, investor trust, and overall market strength, and we believe it should remain that way.
The SEC is proposing to allow public companies to report financial results twice a year instead of the current requirement to report every quarter.
Critics say quarterly reporting pressures executives into short-term decision making and creates significant administrative burden, particularly for smaller public companies.
Quarterly reports provide consistent, timely disclosures that support accurate risk pricing, deter fraud through regular public scrutiny, and reduce the cost of equity capital by limiting uncertainty.
No. The UK and much of Europe require only semiannual reporting. However, 30 of the UK’s top 100 companies by market cap still voluntarily report quarterly, signaling that transparency is valued regardless of what regulators require.
The U.S. stock market is approximately $74 trillion, larger than the next 20 countries combined. Strong disclosure standards, including quarterly reporting, are a key reason for that scale.
Regulation Fair Disclosure, known as Reg FD, requires public companies to share material information with all investors at the same time, preventing selective disclosure. Quarterly reporting reinforces this principle.
Top Row L to R: Brad Engle, Mike Sullivan, Sebrina Ivey, Christian Lewton, Jason Kitner
Bottom Row L to R: Carin Wagner, Angela Kennedy Lee, Jenny Merges, Brian Friedman, Deirdre Mcguire, Barbara Terrazas, Reed McCoy