SEC Poised to End Mandatory Quarterly Reporting for Public Companies

The U.S. Securities and Exchange Commission (SEC) is preparing to propose a significant shift in financial reporting requirements for public companies, potentially eliminating the obligation to file quarterly earnings reports. This move, first reported by the Wall Street Journal, could allow companies to report financial results only twice a year.

A Return to Biannual Reporting?

Under the proposed rule change, companies would have the option to report earnings on a semiannual basis, rather than the current quarterly schedule. The SEC has reportedly been in discussions with major stock exchanges regarding the logistical implications of this change and aims to publish a proposal for public comment as early as April according to the Wall Street Journal.

Historical Context and Support for the Change

The idea of reducing the frequency of financial reporting isn’t new. President Donald Trump previously urged the SEC to consider eliminating quarterly reports during his first term, arguing it would save companies money and allow managers to focus on long-term strategy as reported by PYMNTS. In a 2018 tweet, Trump stated the proposal would “allow greater flexibility and save money.”

Supporters of the change believe that the current quarterly requirement discourages some companies from going public, due to the associated costs and administrative burden as noted by the Wall Street Journal.

International Precedent

Several countries have already moved away from mandatory quarterly reporting. Both the European Union and the United Kingdom eliminated the requirement roughly a decade ago as highlighted by the Wall Street Journal.

Potential Opposition

The proposed change is likely to face opposition from investors who value the transparency provided by quarterly disclosures according to the Wall Street Journal.

The SEC’s proposal will be subject to a public comment period and a vote before any changes are implemented as reported by Reuters.