This story was originally published on CFO Dive. To receive daily news and insights, subscribe to our free daily CFO Dive newsletter. Zuora’s Todd McElhatton sees the argument that a potential return to six-month reporting periods would hamper investor access to information as an unfounded one: “Frankly, I don’t buy that,” McElhatton, the software company’s chief operating and financial officer, told CFO Dive in an interview. In September, President Donald Trump returned to a push he had made in his firs ...

Core Viewpoint - President Trump is advocating for a change in the long-standing tradition of quarterly earnings reports, proposing that companies only need to report earnings twice a year instead of every three months [1][2][3]. Group 1: Proposal and Support - Trump has called on the SEC to relax reporting rules, suggesting that semi-annual reporting would save money and allow managers to focus on running their companies [3]. - SEC Chairman Paul Atkins, a Trump appointee, supports the proposal, stating it is "a good way forward" while allowing companies the option to continue quarterly reporting if they choose [3]. Group 2: Debate on Reporting Frequency - The proposal has sparked a renewed debate regarding the advantages and disadvantages of semi-annual reporting, raising questions among investors about potential changes [4]. - Proponents argue that quarterly reporting encourages short-term thinking among investors, which may hinder long-term investment [5]. Group 3: Comparative Analysis - The shift from quarterly to semi-annual reporting in Europe and the U.K. during the 2010s is cited, but a 2017 Columbia Business School study found no significant increase in corporate investments in the U.K. as a result [5]. - Investment experts like Warren Buffett advocate for quarterly reports but suggest eliminating the mandatory "guidance" section, which can lead to negative outcomes [6].

Group 1 - The SEC plans to overhaul investor disclosure rules for publicly-traded companies, moving towards semi-annual reporting instead of quarterly, as suggested by President Trump [1][6] - Chairman Paul Atkins emphasized the need to evaluate how information is disseminated to investors, noting that many prefer earnings calls over quarterly reports [2] - Atkins criticized the focus on short-term returns driven by quarterly reporting, which he believes affects corporate management negatively [3] Group 2 - Atkins has been a critic of the excessive disclosure requirements, indicating plans to reduce disclosures on executive compensation and potentially eliminate others, such as those related to conflict minerals [4] - The high cost of compliance with regulatory requirements is a significant factor keeping companies private, according to Atkins [5] - The SEC has mandated quarterly reports since 1970, leading to ongoing tensions between investors seeking information and companies wanting to reduce reporting burdens [7] Group 3 - Many companies already generate quarterly data for internal purposes, suggesting that reducing public-facing reports may only slightly lower compliance costs [8]

Core Viewpoint - The ongoing debate about the necessity of quarterly earnings reports highlights the tension between short-term performance pressures and long-term strategic planning for companies, with potential implications for market volatility and investor transparency [4][5][16]. Group 1: Quarterly Reporting System - Large public companies incur significant costs, potentially in the millions, for preparing quarterly reports and audits, which may deter promising small companies from going public [1] - The current quarterly reporting schedule is linked to market volatility, as rapid earnings beats or misses can lead to erratic stock price movements, obscuring true business fundamentals [2] - Since 1970, U.S. publicly traded companies have been mandated to report earnings quarterly, a practice that some argue undermines long-term strategic focus [5][6] Group 2: Potential Changes to Reporting - If quarterly reporting were abolished, the SEC might shift to a semiannual reporting model, similar to practices in the U.K. and Europe [7] - Companies would still need to disclose essential financial information, but the frequency of these disclosures would decrease, potentially leading to less transparency for investors [8][11] - Businesses might voluntarily provide quarterly updates without earnings, focusing on metrics like revenue or subscriber counts, but these would not be regulatory requirements [9][10] Group 3: Impact on Investors - The removal of quarterly earnings reports would likely result in decreased transparency, making it harder for investors to identify early warning signs of financial issues [11] - This change could lead to greater uncertainty and more pronounced price swings when earnings are eventually reported, contradicting the notion that it would reduce market volatility [12][16] - Retail investors, who rely on regular updates for decision-making, could face inflated valuations and increased risks, while institutional investors may adapt more easily due to their analytical resources [13][14]

Group 1 - The Long-Term Stock Exchange (LTSE) is a registered national market system exchange that advocates for long-term investors and companies, differentiating itself from larger exchanges like NASDAQ and the New York Stock Exchange [2][4] - LTSE is pushing for the SEC to allow companies to optionally report their earnings biannually instead of quarterly, aiming to balance investor needs with managerial efficiency [6][10] - There is a concern that stringent quarterly reporting requirements may deter companies from going public, despite a recent uptick in IPOs [7][8] Group 2 - The LTSE's mission includes encouraging companies to focus on long-term planning, which may involve increased spending on research and development [3][4] - The organization has received bipartisan support for its proposals, indicating a rare area of agreement between Democrats and Republicans [5] - Companies should have the flexibility to choose their reporting frequency, with the market accommodating different approaches rather than enforcing a one-size-fits-all model [9][10]

Core Viewpoint - The debate over whether public companies should report quarterly results has resurfaced, with President Trump's proposal to shift to semi-annual reporting to allow managers to focus more on long-term business operations [1][5]. Group 1: Arguments for Semi-Annual Reporting - The SEC has indicated it will prioritize the proposal for semi-annual reporting, which was initially suggested by Trump during his first term in 2018 [1]. - Warren Buffett and JP Morgan CEO Jaime Dimon previously argued that short-termism harms the economy and that companies should focus on long-term performance rather than meeting quarterly earnings forecasts [2][3]. - Robert Grifeld, former NASDAQ chairman, supports the discussion around semi-annual reporting, suggesting it could reduce the burden on companies while still providing investors with valuable information [5][10]. Group 2: Current Reporting Practices - Investors typically desire more frequent information, while companies often prefer less frequent reporting due to the time and effort involved in quarterly earnings releases [6][7]. - Most countries, except for Germany and Austria, have adopted semi-annual reporting to mitigate the focus on short-term results [7]. - Grifeld proposes that companies should provide internal key performance indicators (KPIs) in off quarters to maintain transparency without the full burden of quarterly reporting [8][9]. Group 3: Private Market Considerations - There is a growing concern regarding the lack of disclosure in private markets, where retail investors often have no access to information compared to public companies [12][14]. - Grifeld advocates for private companies with over 100 shareholders to provide management reports every six months, including KPIs, to improve transparency for retail investors [14][16]. - The asymmetry of information in private markets is highlighted as a significant issue that needs addressing, especially as more retail investors seek to invest in these companies [15][17].