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 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].

Regulatory Landscape & Potential Changes - SEC is considering allowing public companies to report results every six months instead of every three months [1] - The proposal aims to eliminate unnecessary regulatory burden on companies [1] Arguments for Semi-Annual Reporting - Semi-annual reporting could save firms money [1] - Managers could focus on properly running their companies with less frequent reporting [1] - It may help America better compete with China's longer-term view of business development [1] - Moving away from short-term guidance would be beneficial for companies [1] Concerns & Counterarguments - Less frequent reporting could raise questions about the opacity and democratization of information [5] - Investor conferences and meetings with IR would become more important with semi-annual reporting [5] - Some argue for more information from companies, not less [3] Short-Termism vs Long-Term Focus - Short-termism is harming the economy [1] - Companies should stop issuing earnings per share guidance on a quarterly basis [1] - Amazon is an example of a company with a long-term focus, prioritizing growth over immediate profits [1][2] Impact on Earnings Analysis - Forecasting earnings per share can be challenging due to various charges and pipeline deals [2] - Revenue misses can lead to stock sell-offs, even if deals are pushed back slightly [2] - Reporting on a six-month basis would reduce the frequency of these events from four times a year to two [2] Frequency of Earnings Reports - The discussion references covering at least 500 companies for 120 earning seasons (30 years * 4 quarters) [4]