By Jen Saarbach & Kristen Kelly, Co-Founders of The Wall Street Skinny
President Trump recently floated the idea that (subject to SEC approval) public companies should no longer be required to report earnings four times a year. His proposal? Only twice a year.
Many of you asked for our take. So, is this a smart reform? Or simply political theater?
The truth is, there are legitimate arguments to moving to only semi-annually. In fact, the US is an outlier internationally on this front. However, there are risks to consider.
To understand the debate, it helps to look back at why the U.S. has quarterly reporting in the first place, and why the rest of the world doesn’t.
A Brief History of Reporting Rules
After the 1929 stock market crash and the Great Depression, Congress created the SEC in 1934 to restore investor confidence. The SEC’s philosophy was that frequent, standardized disclosure would protect retail investors and keep markets fair. By the 1950s and 1960s, quarterly reporting became mandatory for public companies. Given that the U.S. has always had the largest base of individual investors in the world, and the size and liquidity of our markets has naturally meant faster-moving prices, quarterly reporting seemed necessary to maintain transparency.
Internationally, things evolved differently.
When the IASB issued IAS 34 Interim Financial Reporting in 1998, it required only annual financial statements, leaving interim updates to local regulators. In Europe, the EU’s 2004 Transparency Directive settled on semiannual reports as the balance between cost and transparency. IFRS has generally taken a principles-based, lighter-touch approach, assuming institutional investors dominate and can demand information directly from management. That’s why most IFRS adopters report annually plus one interim, while the U.S. remains the outlier at four times a year.
The Case for Fewer Reports
- Encouraging More Companies to Go Public
In 1996 there were roughly 8,000 public companies in the U.S. Today there are only around 4,000. Many firms stay private not only because private capital provides liquidity through M&A, but also because being public is expensive. Quarterly updates are one headache that discourages IPOs. Cutting the frequency could lower that barrier and bring more high-growth companies to market. - Cost & Distraction
Quarterly reporting is expensive and time-consuming. Management teams spend significant energy preparing 10-Qs, drafting MD&As, running earnings calls, and shaping investor messaging. All of this pulls focus from actually running the business. - Global Consistency
Moving to semiannual reporting would bring the U.S. more in line with global practice under IFRS, where most companies file twice a year.
The Case for Staying Quarterly
- Transparency
The U.S. has far more retail investors than most markets. Frequent updates mean better information flow, especially to individuals who can’t just grab coffee with the CEO. Quarterly filings level the playing field. - Deterring Misconduct
With fewer required updates, it could be easier for companies to hide problems or engage in fraud. Quarterly reports provide more frequent checkpoints for regulators and investors. - Does It Actually Change Behavior?
Some argue that quarterly reporting pushes companies to chase earnings targets at the expense of long-term strategy. But shifting from four to two reports per year probably won’t fix that. It’s like members of Congress: changing election cycles from two years to three wouldn’t fundamentally change the incentives to campaign constantly.
Bottom Line
There’s some merit to the proposal. Less frequent reporting could reduce costs, encourage IPOs, and bring the U.S. in line with international norms.
But it comes at the expense of transparency, especially for retail investors, and it’s unlikely to cure Wall Street’s obsession with short-term numbers.
A possible compromise? Allow smaller companies outside major indices to report semiannually, while large-cap firms in benchmarks like the S&P 500 and Nasdaq — where millions of retail investors are exposed through ETFs — continue quarterly. That way, the heaviest burdens are eased without sacrificing transparency where it matters most.
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