The U.S. Securities and Exchange Commission (SEC) has proposed eliminating the requirement for public companies to file quarterly financial reports, a move that has drawn overwhelming opposition from investors, industry groups, and market watchdogs. The proposal, announced on May 8, 2019, would reduce mandatory disclosures to semiannual and annual reports, a shift that critics argue would limit transparency and put smaller investors at a disadvantage.

The SEC opened the rule change for public comment for 60 days, during which more than 68,000 responses were submitted—nearly all opposing the measure. Institutional investors, auditing professionals, and individual shareholders largely expressed concern that less frequent reporting would leave investors "blind" for extended periods, hindering their ability to monitor company performance and make informed decisions.

Dennis Kelleher, co-founder and CEO of the investor advocacy group Better Markets, highlighted that while large institutional investors and insiders would likely retain access to information, smaller individual investors would bear the brunt of reduced disclosure. He warned the change could exacerbate the already uneven playing field in financial markets.

The proposal was propelled by President Donald Trump’s social media statement on September 15, 2018, advocating a six-month reporting schedule. Trump argued that such a change would save companies money and allow management to focus on long-term business operations, contrasting this with what he described as short-term corporate thinking driven by quarterly reports. However, experts and former regulators disputed these claims, noting that quarterly filings involve standardized reporting of existing financial data and that executives’ involvement in preparing these documents is typically minimal.

SEC Chairman at the time, Paul Atkins, endorsed the discussion, suggesting that private companies’ reliance on less frequent reporting could be a model for public firms. Atkins also cited anecdotal assertions that quarterly reporting fosters short-termism among corporate leaders but did not provide empirical evidence to support this claim. He further suggested that retail investors could obtain necessary information through other channels such as financial news outlets.

Historically, financial disclosure requirements have evolved toward greater transparency. By 1931, nearly two-thirds of companies listed on the New York Stock Exchange voluntarily provided quarterly earnings, and mandatory quarterly reporting became standard practice in 1970. Experts argue that this trend reflects investors’ demand for timely information rather than regulatory imposition.

Some proponents of reducing reporting frequency reference concerns voiced by prominent investors like JPMorgan Chase CEO Jamie Dimon and Warren Buffett about corporate short-termism. However, Dimon and Buffett specifically criticized quarterly earnings guidance—projections made by managers—not the quarterly reporting itself. They maintained that transparent quarterly and annual financial reporting is essential for shareholders and stakeholders to evaluate company performance accurately.

Market analysts emphasize that even if many individual investors do not closely read quarterly reports, these filings contribute crucial information to the market, facilitating accurate price discovery. Quarterly disclosures contain high-quality, detailed data subject to strict regulatory scrutiny and legal penalties for inaccuracies, providing a safeguard against corporate misconduct.

Critics also warn that reducing reporting frequency risks repeating past mistakes when companies like Enron and WorldCom concealed problems between mandatory disclosures. They argue that the potential cost savings from fewer reports do not outweigh the risk of diminished transparency and investor protection.

The debate over the SEC proposal highlights a fundamental difference in perspectives on the role and scope of financial regulation, with investor advocates emphasizing protection and transparency and some policymakers focused on reducing perceived burdens on businesses. As the SEC considers public feedback, the agency faces a key decision on balancing regulatory efficiency with the preservation of market integrity.