Scraping Quarterly Earnings: Why an Investor’s FOMO is a CEO’s TMI

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American companies have reported their finances to the SEC every quarter since the 1970s—an uninterrupted Wall Street ritual for over half a century. Now SEC Chairman Paul Atkins is signaling a major shift to semiannual reporting. His argument posits that quarterly reports no longer remain useful measures of company progress, as they burden companies with unnecessary costs, and trap management in redundant 90-day performance cycles.

The idea has seen some significant support. Warren Buffett and Jamie Dimon co-wrote an op-ed backing the move away from quarterly reporting, part of a push dating back to 2018. Dimon has argued that smaller companies going public simply can't afford the same reporting costs as larger firms. But investors and market watchers remain nervous about a critical question: what could go wrong in those 180-day gaps between reports? 

The U.S. Reporting Framework

The SEC's quarterly reporting mandate dates to 1970, and builds on the Securities Exchange Act of 1934, which first required listed companies to make regular public disclosures. For over five decades, this framework has remained largely unchanged—making any shift to semiannual reporting a significant departure from established practice.However, the recent shift in requirements for reporting in Washington has been largely bipartisan. Going back as far as 2015, President Obama recognized the logic in straying away from quarterly reporting, saying “a lot of times [companies] feel like they’re going to get punished in the stock market. And so they don’t do [wage increases], because the definition of being a successful business is narrowed to what your quarterly earnings reports are.” The only split seems to be with business leaders with a view skewed towards the long-term horizon, and investors who want to be rewarded as often as the market fluctuates. Some prominent exchanges, like the NASDAQ or LTSE (a San Francisco based long-term exchange) have reported that since 2000, there has been an increase in privately held companies (a 475% increase) and a drop in publicly held companies (a 36% decrease). Over this 25-year period, it’s clear that there has been an obvious incentive towards privatization, and these stock exchanges advocate for fewer restrictions in order to revitalize the public exchange market. On the other hand, there are good corporate governance reasons to have more frequent reporting. With more honest earnings reports, retail investors can be assured that their prospective investments aren’t backed by fraudulent data, and more business data gives a better insight for all public investors to have an accurate assessment of their investments. Investors seem wary of semiannual reporting, as market shocks can be quite volatile on a quarterly basis as is. The potential shift to semiannual reporting, then, could trigger far greater fluctuations once investors do receive the proper information.

Global Precedents

The U.S. wouldn't be the first to make this change. The United Kingdom (UK) adopted quarterly reporting in 2007, only to abandon the mandate in 2014 after it determined that the system created unnecessary burdens. Interestingly, companies that voluntarily maintained quarterly reporting retained unexpected benefits: they could signal financial strength more frequently to investors with whom they have built long-term relationships. It also signalled that those asking for more information were usually retail investors that needed more transparency. The European Union (EU) had the same shift, phasing out quarterly reporting in 2013, while Japan phased out in 2024. If major economic blocs like the EU, and key G20 countries like Japan and the UK, have also thought quarterly reporting burdensome, there is sufficient economic evidence to suggest that it could unduly burden U.S. companies. However, even within the G20 group, there is no other economy that can directly compare to the United States in size and strength.

Solutions

This raises the question that if larger companies (like those listed on the S&P 500) can afford quarterly reporting costs, and constitute 80% of the total value of the U.S. economic landscape, should they continue to do so regardless of policy shifts? If they elect not to, they may risk having Wall Street set forecasts on their behalf. As one columnist told his readers, “if companies don’t set goals, Wall Street will”. Because large companies have the resources and incentive to self-report quarterly, smaller firms could become "second-class" businesses—unable to afford frequent disclosures to assure investors, yet vulnerable to speculation during the long gaps between semiannual reports. These companies would be left at the mercy of industry rumors and investor sentiment, with no affordable way to compete on equal footing. Brown University scholars suggest, instead, that there be a two-tiered reporting system, where “blue-chip” firms would need to report quarterly, and small businesses would only need to report semiannually if publicly traded. 

Still, a two-tier reporting system would find hardship in any implementation. First, it would be unclear which governing body would handle oversight and enforcement. Second, it would incentivize companies to under-report earnings so as to avoid additional reporting costs. And finally, institutional lobbyists are unlikely to support any bifurcation if they cannot engineer workarounds. 

Conclusion

If there were a two-tier system within an economy, it may create some information gaps, but would at least give the most important businesses in the economy an important task of ensuring transparency and efficiency.

The move to semiannual reporting, initiated by the Trump administration, will most probably be effectuated, although the timeline remains uncertain as to when businesses will stop needing to report quarterly. According to other countries’ takeaways, not much will come from the shift, as both semiannual and quarterly schedules seem to reside within a Goldilocks’ Zone of good corporate governance. However, there are some obvious differences, as sudden shocks to the U.S. economy, which holds a much higher concentration of global wealth, may trigger higher shocks as poor semiannual reports come through, sending ripple effects through investor communities.

*The views expressed in this article do not represent the views of Santa Clara University.