SEC Reporting Reform and the Debate Over Quarterly Disclosures

By: Grant Wahlstrom, Internal Audit Director of Internal Audit, Fraud and Forensic Accounting
July 13, 2026

The Securities and Exchange Commission (SEC) has proposed replacing quarterly reporting with an option for public companies to file financial reports semiannually. In the release, Chairman Atkins described the shift as a way to restore self-determination: companies and investors that prefer quarterly reporting could continue using it, while those that prefer semiannual reporting could choose that approach instead.

The rule change is part of a broader debate over whether quarterly reporting creates unnecessary pressure for companies to focus on short-term results. Under the SEC’s recent proposal, public companies could choose to file semiannual reports on new Form 10-S instead of mandatory quarterly reports on Form 10-Q. Quarterly reporting would remain the default, but eligible companies could opt into the semiannual schedule through a checkbox on their annual Form 10-K. A company using the new framework would file one six-month interim report and one annual report, while Form 10-S would require substantially the same narrative and financial disclosures as Form 10-Q, only for a six-month period. Companies that stop filing quarterly reports could still provide quarterly financial information through earnings releases furnished on Form 8-K.

Mandatory quarterly reporting began in 1970, but interim reporting requirements had developed earlier through company practice, exchange listing standards, and legislation. Before Congress added interim-reporting authority to Section 13(a) of the Securities Exchange Act of 1934, quarterly reporting was already common among New York Stock Exchange-listed companies, though those reports differed significantly from today’s filings.

Supporters of the proposal argue that a six-month reporting cycle could reduce compliance costs and give management more room to focus on long-term strategy, capital investment, and product development. They also contend that companies already provide earnings releases, conference calls, and current reports that can supply important information between formal filings.

Critics argue that less frequent reporting would reduce transparency and make it harder for investors to monitor performance and compare companies on a timely basis. Quarterly reports shorten the period during which management alone has access to material financial information, and they give analysts, auditors, and regulators more frequent opportunities to identify problems before they grow. A longer reporting gap could also increase information asymmetry and make market reactions more abrupt when results are finally disclosed

Quarterly reporting plays a central role in how securities trade in financial markets. An earnings beat or miss of a single penny per share can significantly affect a company’s stock price. As a result, some believe management teams may avoid major business changes that could hurt near-term results and depress share prices. This concern is commonly known as short-termism.

The stated purpose of reducing reporting requirements is to give management more room to make long-term business decisions and, in turn, reduce short-termism. Quarterly reporting may encourage executives to prioritize 90-day targets, while a six-month cycle could provide greater flexibility for investments such as research and development. Less frequent reporting may also reduce pressure to meet Wall Street’s quarterly estimates, which can otherwise encourage aggressive revenue recognition or unnecessary expense cuts to “make the quarter.” Reporting frequency also affects costs: the SEC’s economic analysis estimates that semiannual reporting would save each company about $198,000 per year.

Research suggests that the empirical case for short-termism is weak. Since the modern adoption of quarterly reporting, U.S. financial markets and corporate investment, including research and development, have grown significantly. Although that connection is not definitive, a 2018 review of the empirical literature found that the macro predictions of the short-termism hypothesis are “largely undemonstrated, implausible, or untrue.” Even share repurchases, often cited as evidence of short-termism, do not clearly support that claim. Recent work by Harvard’s Elliot Tobin and Charles Wang found that, across 17 countries, legalizing buybacks was followed by an 8 to 10 percent increase in corporate investment, rather than a decline.

More recently, the United Kingdom’s experience suggests that financial markets can adjust on their own. The UK required quarterly reporting in 2007 but ended that mandate in 2014. Still, about 91 percent of UK firms continued reporting quarterly through the end of 2015. By 2017, roughly 40 percent of FTSE 100 companies had shifted to semiannual reporting. The result was largely uneventful: a Goldman Sachs report found that reporting frequency had no effect on valuations.

The main objections to reducing quarterly reporting are straightforward. Less frequent disclosures can increase information asymmetry by leaving investors without required updates for six months, allowing rumors, leaks, or informal comments to fill the gap and potentially favor institutional traders over individual investors. Delayed reporting may also increase volatility by concentrating market reactions into fewer, larger earnings events. Supporters argue that less frequent reporting could reduce speculative trading by limiting knee-jerk responses from day traders and algorithmic systems to minor short-term misses, while attracting more patient institutional investors focused on long-term fundamentals rather than quarterly fluctuations.

A system that lets companies choose between quarterly and semiannual reporting could fragment disclosure practices, making it harder to compare competitors, assess sector benchmarks, and allocate capital efficiently. In addition, many companies already close their books monthly for internal purposes, so the main burden is often preparing the information for regulatory filing. Finally, there is little evidence that less frequent reporting improves long-term planning or increases research and development spending.

Quarterly financial reporting helps prevent and detect corporate fraud by subjecting public companies to regular, predictable scrutiny. More frequent disclosure shortens the period during which insiders alone control material nonpublic information, helps auditors and regulators identify accounting problems before they escalate, and enables ongoing review by analysts, short-sellers, and forensic accountants. It also improves expense oversight by requiring key costs, including executive travel, to be compiled for audit-committee review, making unauthorized routing or self-approval schemes more difficult to conceal.

The case for semiannual reporting also depends on whether quarterly pressure truly distorts business decisions. Some commentators argue that the empirical evidence for widespread short-termism is weaker than commonly assumed, and that markets can adapt when reporting rules change. But even if the costs of quarterly reporting are real, the policy question is whether lower compliance burdens justify giving up a disclosure rhythm that many investors still rely on for oversight, comparability, and fraud detection. On balance, the proposal raises a genuine tradeoff. It may give companies more flexibility and slightly lower reporting costs, but it also risks reducing the regular flow of information that supports market discipline and investor confidence.

In conclusion, the central issue is transparency versus convenience. Although agencies such as the U.S. Securities and Exchange Commission (SEC) aim to reduce regulatory burdens, many institutions oppose the proposed change because it would deprive markets of timely, material information. Investors, financial professionals, and corporate governance experts broadly agree that reducing or eliminating quarterly reporting is unwise. While lower compliance costs and less executive short-termism are appealing goals, practical evidence suggests the change would create more problems than it solves.