The SEC is revisiting the idea of scaling back disclosures. Is this a necessary regulatory reform or a step backward for market transparency? 

When should companies update investors about their financial health? That seemingly technical question has resurfaced in the public spotlight following comments from President Donald Trump. In a post on his social media platform Truth Social, Trump argued that publicly traded companies should report earnings on a semiannual basis instead of quarterly. “This will save money and allow managers to focus on properly running their companies,” he wrote.

The statement has reignited a long-running debate over the balance between corporate transparency and regulatory burden—a debate that has implications not only for Wall Street but also for Main Street investors and the global economy.

A Brief History of U.S. Financial Reporting

Quarterly reporting has been the norm in the United States for over half a century. The Securities and Exchange Commission (SEC) began requiring quarterly earnings releases in 1970, shifting away from the semiannual standard established in 1955.

This evolution reflected the growing sophistication of financial markets and the increasing demand from investors for more frequent and standardized disclosures. The broader foundation was laid earlier: under the Securities Exchange Act of 1934, corporations were required to file annual 10-K reports, which included audited financial statements.

These filings became the cornerstone of investor protection, designed to ensure transparency in capital markets following the Great Depression. Since then, the quarterly system has shaped how investors, analysts, and executives engage with corporate America. It has also contributed to a culture of short-term earnings pressure, something critics argue stifles innovation and long-term strategic thinking.

A Global Perspective

The U.S. is an outlier compared to many other developed markets. The United Kingdom, the members of the European Union, and several Asian economies typically require semiannual reporting instead of quarterly updates. For example, the European Commission scrapped mandatory quarterly reporting in 2014, citing the burden on companies and the desire to reduce “short-termism” in financial markets.

Advocates of semiannual reporting often point to these markets as proof that fewer updates do not necessarily compromise investor trust or market efficiency. Yet, critics counter that U.S. markets are far more liquid, complex, and reliant on real-time data than many of their international counterparts. What works in London or Frankfurt, they argue, may not seamlessly translate to New York.

Trump’s Renewed Proposal

This is not the first time Trump has floated the idea of semiannual reporting. During his first term in office, he suggested that reducing the frequency of corporate disclosures would discourage short-term thinking and cut compliance costs. In 2018, the SEC even opened a public consultation on the matter, but ultimately decided against making changes.

Now, with SEC Chairman Paul Atkins reportedly prioritizing the proposal as part of a broader effort to reduce “unnecessary regulatory burdens,” the discussion has regained momentum. The stakes are high: any shift would fundamentally reshape the relationship between companies, investors, and regulators.

The Case for Semiannual Reporting

1. Reducing Compliance Costs: One of the most common arguments in favor of semiannual reporting is the financial burden of compliance. Preparing earnings reports is expensive, involving auditors, legal teams, and extensive managerial input. Smaller companies, in particular, may find quarterly reporting disproportionately costly relative to their size.

2. Focusing on Long-Term Strategy: Supporters also argue that quarterly reporting feeds into a culture of “earnings management,” where executives prioritize short-term results over long-term investments in research, innovation, or sustainability. According to a 2006 survey by Duke University, nearly 80% of CFOs admitted they would cut discretionary spending on areas like R&D to meet quarterly earnings targets.

3. Aligning with International Standards: Moving to semiannual reporting would bring U.S. practices more in line with global peers, potentially reducing friction for multinational corporations and international investors.

The Case for Quarterly Reporting

1. Investor Transparency and Confidence: Critics of semiannual reporting stress that frequent disclosures are essential for maintaining market trust. Quarterly updates provide investors with timely information to make informed decisions, which is especially critical in a trading environment dominated by high-frequency algorithms and real-time data flows.

2. Guarding Against Information Asymmetry: Less frequent reporting could widen the information gap between company insiders and outside investors. If only executives have detailed, up-to-date knowledge of company performance for six months at a time, concerns about fairness and potential insider trading could escalate.

3. Market Discipline: Regular reporting also enforces discipline on management. By subjecting executives to quarterly scrutiny, investors and analysts ensure that poor performance cannot be hidden for long stretches of time. This accountability is one reason U.S. markets remain among the most transparent and liquid globally.

A Middle Ground: Ending Quarterly Guidance

Interestingly, some experts argue the problem lies not with quarterly reporting itself but with quarterly guidance. Over the past three decades, it became common practice for companies to provide forward-looking projections on earnings every quarter. Critics contend that these forecasts amplify short-term pressures and invite speculative trading.

In fact, in 2018, Warren Buffett and Jamie Dimon co-authored a Wall Street Journal op-ed urging companies to stop issuing quarterly earnings guidance. They argued that doing so would allow firms to “focus on executing long-term strategies” without losing the benefits of regular reporting. This compromise, retaining quarterly disclosures while ending the practice of quarterly forecasting, may strike the right balance between transparency and long-term vision.

Where Do We Go From Here?

The debate over financial reporting frequency is not simply about regulatory technicalities; it reflects deeper philosophical questions about the purpose of capital markets. Should markets prioritize real-time transparency at the risk of fostering short-termism? Or should they prioritize long-term strategic freedom even if it means investors have less frequent information?

The answer may depend on one’s perspective. Institutional investors often prefer more data, while executives tend to favor fewer reporting requirements. Retail investors, meanwhile, may benefit from transparency but also suffer if companies cut corners on long-term growth to meet quarterly targets.

Ultimately, any change will need to weigh these competing interests carefully. The U.S. financial system thrives on trust, liquidity, and accountability. Diluting these principles for the sake of cost savings may prove shortsighted. Yet, ignoring the legitimate concerns about short-termism could stifle the innovation and investment needed to drive future economic growth.

A Decision with Lasting Consequences

The debate over earnings reporting frequency represents more than a technical regulatory question; it reflects fundamental tensions between corporate autonomy and investor oversight, short-term accountability and long-term value creation, American exceptionalism and international convergence in financial markets.

As the SEC considers potential changes to decades-old practices, the decision will likely influence not only how companies communicate with investors but also how executives make strategic decisions, how investors allocate capital, and how American companies compete in global markets. The stakes extend far beyond quarterly earnings calls to encompass the very structure and philosophy of American capitalism. 

 Originally Published on Substack.