US Quarterly Earnings Reports May Become Semi-Annual? SEC Reportedly to Submit Proposal to Cancel Quarterly Reports by April at the Earliest

The U.S. Securities and Exchange Commission (SEC) is reportedly considering a major change that could eliminate the quarterly reporting requirement for U.S. publicly traded companies, allowing them to report their earnings twice a year.

According to reports, regulators are discussing this plan with officials from major exchanges. The proposal could be announced as early as April to solicit public feedback, with a typical public comment period of 60 days for significant rule proposals.

This may be related to some of former President Trump’s past statements. In September last year, Trump suggested that companies should be allowed to report their earnings every six months instead of quarterly, arguing that this would help companies save money and enable management to focus more on operations.

Supporters of this idea also point out that some companies remain private because they want to avoid the time and expense associated with being publicly traded. About ten years ago, the European Union and the UK eliminated the requirement for quarterly financial reports.

Pros and Cons

During his first term, Trump proposed the same idea, claiming it would provide greater flexibility, but the proposal was not implemented at that time.

At the end of last year, the Long-Term Stock Exchange (LTSE) in New York applied to the SEC to change the frequency of information disclosures. Since then, momentum for reforming disclosure requirements has significantly increased. The SEC’s proposed elimination of quarterly reports could mark a key milestone, ending the mandatory quarterly disclosure rule that has been in place in the U.S. for 50 years. However, quarterly reports are not expected to disappear entirely; they may become optional.

From a regulatory perspective, supporters and opponents each have valid points. Proponents argue that quarterly reporting helps maintain liquidity and stability in the U.S. capital markets because investors trust the quality and frequency of corporate disclosures. Additionally, sufficient information can increase analyst coverage, aiding investors in making rational decisions.

Opponents, however, point out that the effort and costs required to comply with quarterly reporting are factors contributing to the decline in the number of listed companies in the U.S. Furthermore, quarterly reports are seen as a reason why companies focus less on long-term investments and more on achieving short-term profits and meeting quarterly earnings forecasts.

(Source: Cailian Press)