Core Argument - U.S. financial regulators are considering modifying or rescinding the 55-year-old rule that mandates public companies to issue formal financial reports every 90 days, potentially shifting to semiannual reporting [1][9]. Group 1: Arguments for Eliminating Quarterly Reporting - Business leaders express concerns about the costs and distractions associated with the short-cycle reporting process, which may lead to a short-term bias in corporate decision-making [2][11]. - Academic and industry studies suggest that semiannual reporting does not impair and may even enhance company performance and the quality of financial information available to investors [3][24]. - The current quarterly reporting regime has been linked to significant market distortions, including abnormal volatility and mispricing, particularly disadvantaging small investors [4][44]. Group 2: Evidence Supporting Semiannual Reporting - Studies indicate no significant differences in corporate performance metrics such as return on equity, net profit margins, and earnings per share growth between quarterly and semiannual reporters [25][28]. - Research from the UK shows that the removal of mandatory quarterly reporting did not materially impact corporate investment decisions, suggesting that the frequency of reporting may not significantly influence long-term investment strategies [27][42]. - Evidence from the UK indicates that semiannual reporting is associated with higher quality financial information, including reduced accruals manipulation and improved earnings persistence [28][29]. Group 3: Arguments for Maintaining Quarterly Reporting - Traditionalists argue that the current quarterly reporting cycle is essential for maintaining market discipline and efficient price discovery, asserting that more frequent updates provide better information for investors [16][18]. - Critics of the proposed change highlight that U.S. corporate profits are at near all-time highs, suggesting that the current system does not hinder long-term investment [17][41]. - Concerns exist that less frequent reporting could lead to increased market volatility and misallocation of capital, potentially harming overall economic stability [19][23]. Group 4: The "Earnings Game" - The quarterly reporting cycle has created a phenomenon known as the "Earnings Game," where market participants engage in strategies that can distort trading patterns and compromise the quality of financial information [4][44]. - This environment encourages short-termism among executives, who may prioritize meeting quarterly earnings targets over long-term value creation [12][40]. - The pressure to meet quarterly expectations can lead to practices that undermine the integrity of financial reporting, including earnings management and manipulation [39][44].

Core Insights - The potential shift from quarterly to semi-annual reporting in the US could lead to less frequent updates on company performance, impacting investor communication and trust [1][2][3] Group 1: Reporting Frequency and Investor Impact - Singapore's transition to semi-annual reporting in February 2020 resulted in many companies opting for less frequent updates, highlighting a trend where companies may prioritize reduced reporting over regular communication [3][4] - Financial services firms like DBS Group chose to maintain quarterly reporting to build trust and confidence among investors, demonstrating the importance of regular communication in certain sectors [5] - Different types of investors have varying needs; value investors rely on quarterly updates for tracking recovery plans, while growth investors may benefit from less frequent reporting that allows for long-term focus [14][15][16] Group 2: Quality of Communication - The quality of communication is more critical than the frequency of reporting; companies that wish to engage meaningfully with shareholders often find alternative ways to provide insights beyond quarterly earnings calls [12][13] - Companies that do the bare minimum in reporting may remain opaque regardless of how often they disclose results, indicating that transparency is not solely dependent on reporting frequency [20][21] Group 3: Market Dynamics - The removal of quarterly reporting could alter how markets price stocks, as the current system creates a cycle of trading based on earnings expectations [16][17] - High-quality businesses with strong management may not be affected by changes in reporting frequency, as their value creation occurs over time rather than through frequent updates [18][19]

Regulatory Landscape - Wall Street's top regulator commits to expedite Donald Trump's proposal [1] - Proposal aims to end quarterly reporting for most companies [1]

Market Trend - Ending quarterly reporting is not solely a stock market issue [1]

The SEC actively looking into proposal by President Trump to switch earnings reports from a quarterly to semianual basis. Joining us right now first on CNBC to discuss this and so many other issues is SEC Chairman Paul Atkins. Uh Mr.. Chairman, we appreciate you joining us. Uh it is uh the issue of the week if not much longer than that. Uh a lot of CEOs in America and investors trying to understand this proposal and how you're thinking about it right now.Well, thank you Andrew. thanks for having me uh on to ...

Core Viewpoint - President Trump is advocating for a shift from mandatory quarterly earnings reports to semiannual disclosures for U.S. public companies, arguing that this change would reduce costs and allow executives to focus on long-term growth [1][3]. Group 1: Proposal Details - The proposal requires approval from the Securities and Exchange Commission (SEC) [2]. - Trump emphasized that companies should not be forced to report quarterly but rather on a six-month basis, suggesting that this would alleviate short-term pressures on American firms [3]. Group 2: Historical Context and Support - This idea is not new; during his first term, Trump had previously directed the SEC to explore the possibility of six-month reporting, but the initiative did not progress due to concerns about investor transparency [4]. - Business leaders, including JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway chairman Warren Buffett, have long supported this argument, criticizing the focus on short-term profits created by quarterly reporting [4]. Group 3: Industry Reactions and Comparisons - The Long-Term Stock Exchange is preparing to petition the SEC to allow companies to move away from quarterly reporting, citing the burdensome nature of being a public company [6]. - Supporters of the current quarterly reporting system argue that it provides necessary transparency for shareholders and policymakers [7]. - Economists warn that reducing report frequency could limit investor oversight and market stability [8]. - Internationally, Trump's proposal would align U.S. practices more closely with Europe and the UK, where companies typically report every six months but can opt for quarterly results [11].

Regulatory Changes - Companies may be required to report earnings every six months instead of quarterly, pending SEC approval [1] Potential Impact - The proposed change could affect market trends and investment strategies due to altered reporting frequency [1]