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

Caixin, March 17 (Editor: Ma Lan) The U.S. Securities and Exchange Commission (SEC) is reportedly considering a major reform that could eliminate the quarterly reporting requirement for U.S. listed companies, allowing them to report earnings only twice a year.

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

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

Supporters of this view also point out that some companies remain private because they do not want to spend the time and money required for listing and maintaining public trading. The European Union and the UK abolished the quarterly financial reporting requirement about ten years ago.

Pros and Cons Trump proposed the same idea during his first term as president, 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 disclosure. Since then, the push for reforming disclosure rules has gained momentum. 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 but may become optional.

From a regulatory perspective, supporters and opponents each have valid points. Advocates argue that quarterly reporting helps maintain liquidity and stability in the U.S. capital markets because investors trust the quality and frequency of company 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 publicly listed companies in the U.S. Furthermore, quarterly reports are also seen as a factor that discourages companies from making long-term investments, as they focus more on short-term profits and meeting quarterly earnings forecasts.