When President Trump suggested moving from quarterly earnings reports to semiannual disclosures, critics howled. And my own initial reaction was guarded.
Investors warned of less transparency. Executives worried about confusing the markets. Commentators painted images of CEOs hiding bad news for half a year. Yet the simple question remains: Does the 90-day cycle make companies stronger, or does it just keep everyone chained to a stopwatch?
For decades, quarterly reports have been the American ritual. They arrive like the seasons, each one an exercise in parsing whether a company beat or missed “the number.” The frenzy sometimes feels less like investing and more like sports betting.
As a finance professor, I see how this short-term focus shapes behavior. Students analyze cases where firms delay projects or cut research just to hit the quarterly target. A former student now in corporate development admitted, “We spend as much time managing earnings expectations as we do managing the business.”
Other markets have tried to escape this treadmill. The European Union scrapped mandatory quarterly reporting in 2013, keeping only semiannual and annual filings. The United Kingdom went one better: After imposing quarterly reports in 2007, it abolished them in 2014.
These changes gave researchers a natural experiment. Their findings are surprising: Companies that stopped filing quarterly reports did not slash investment, nor did they suddenly become bold long-term visionaries. Real investment levels hardly budged.
What did change was the information environment. Analyst coverage declined and earnings forecasts became less accurate when the quarterly cadence disappeared.
This is the dilemma. On one hand, investors gain valuable insight from steady updates. On the other, the compliance burden is real, especially for smaller firms.
In 2018, when the Securities and Exchange Commission asked for comment on reporting frequency, many smaller issuers said that every 10-Q cycle drained resources from growing their businesses.
For these firms, semiannual reporting might reduce costs and even encourage more IPOs. For large corporations with entire teams devoted to disclosure, the savings would be less meaningful.
The U.K. experience offers a clue to how balance might be struck. Even after the mandate ended, many big companies kept issuing voluntary quarterly updates. They knew investors demanded a regular flow of information, and trust is the currency of capital markets.
This suggests a hybrid model: Require only semiannual reports, but encourage lighter quarterly updates containing key metrics.
That would cut legal and auditing burdens while still giving analysts the raw material they need. Companies would still have to disclose major developments promptly through Form 8-K filings, so investors would not be left in the dark when real news breaks.
The larger issue is how capital markets allocate trust.
Quarterly reporting can turn CEOs into sprinters, constantly pacing themselves for the next lap instead of running a marathon. At the same time, scrapping quarterly reports outright could make markets less transparent and more prone to rumor. Neither extreme is appealing.
The better solution is smarter disclosure: Fewer glossy slide decks and more substantive information, delivered in a cadence that supports long-term value creation without starving investors of facts.
This is not just inside baseball for accountants. The reporting framework shapes who enters public markets.
If the system is too burdensome, more companies will choose to stay private, limiting opportunities for ordinary investors. If it is too opaque, investors will demand higher returns to compensate for the risk, raising the cost of capital for firms that want to grow.
The balance between efficiency and transparency matters to everyone who holds a mutual fund, a pension plan, or a retirement account.
President Trump’s proposal has sparked the right conversation. Are we locked into quarterly reporting simply because that is how it has always been done, or can we design a system that actually serves investors and companies alike?
The evidence from Europe and Britain suggests it is possible to reduce frequency without wrecking investment. The challenge is to preserve transparency while lightening the load.
It is time to stop worshiping at the altar of the quarter. Public companies should spend less time choreographing earnings calls and more time building durable businesses. Investors, meanwhile, deserve information that is timely and meaningful, not just ritualistic.
Semiannual reporting, reinforced by lighter quarterly updates, offers a way to keep trust intact while breaking free from the tyranny of the stopwatch.
Michael Sury is associate professor of practice (Finance) at the University of Texas at Austin and managing director for the Center for Analytics & Transformative Technologies.