The US Securities and Exchange Commission has proposed allowing listed companies to elect semi-annual reports on new Form 10-S instead of quarterly reports on Form 10-Q. According to the regulator, this flexibility would allow companies to choose the reporting frequency that best serves both the company and its investors. The proposal has reignited debate over investor protection and market transparency, with corporates potentially benefiting from reduced compliance costs and relief from quarterly earnings pressure. The push for fewer earnings reports ramped up last fall, after President Donald Trump asked the regulator to investigate whether fewer earnings reports might benefit companies. For decades, quarterly earnings have been a core Wall Street ritual, forcing companies to lift the hood and show investors what's happening through hard numbers.
There's evidence that some companies agree with the proposal's benefits. In 2019, after Trump first asked the SEC to explore the issue, the Nasdaq found that three-quarters of the 180 companies it surveyed favored a switch to semi-annual reporting, according to results posted on the SEC's website. The potential cost savings are substantial - companies reported paying an average of $334,697.63 a quarter on earnings, with at least one respondent citing quarterly costs as high as $7 million. The average company said it spent about 852.95 hours a quarter on earnings, which is more than two weeks per person per quarter, assuming a 10-person team. Reducing corporate earnings to just twice a year would therefore give the average executive an entire month back, which could be spent on other things.
Market participants warn that the proposal could increase information asymmetry and heighten insider-trading risks. As reported by The Financial Express, Nilesh Shah, managing director of Kotak Mahindra Asset Management Company, expressed concerns about potential arbitrage between different investor sets, particularly noting that private equity firms will continue seeking quarterly financial information. Shah also highlighted concerns about increased insider trading, particularly in jurisdictions like India where market regulators lack comparable enforcement powers to the SEC. A 2018 survey by the CFA Institute found that 82% of investor respondents strongly agreed that they would "struggle to locate information" if earnings reporting requirements were reduced. Most investors surveyed also agreed that the benefits of quarterly earnings outweighed the costs.
The costs of quarterly reporting don't just burden companies - they also support a sprawling ecosystem. Preparing a single release can take weeks and pull in dozens of people across legal, accounting, and communications teams. The money spent on earnings underwrites thousands of white-collar jobs, many already under pressure from artificial intelligence and a slowing economy. The biggest losers may be for-hire professionals called in on an ad-hoc basis to help pull quarterly earnings together, including corporate lawyers and auditors. Significant diversion of legal and finance/accounting team resources, plus expense of lawyers and accountants ranked as a top cost of preparing earnings reports among the 146 members who responded to the Society for Corporate Governance's survey. However, experts don't see management taking advantage of reduced reporting requirements - as Sandy Peters from the CFA Institute noted, "Do you really think management's going to say, 'Hey, just because we don't have to report to the outside, I only want to look at my business every six months?'"
Interestingly, some Indian corporates believe a similar framework could eventually work in India. Anand Agarwal, chief financial officer of V-Mart Retail, stated that "this is the need of the hour" and noted that a half-yearly reporting structure would free up management bandwidth and reduce compliance costs. However, most experts believe India is unlikely to adopt such a framework in the foreseeable future, as reported by The Financial Express. They argue that Indian investors depend heavily on periodic regulatory disclosures, and less frequent reporting could encourage speculation and increase uncertainty. The US market is at a much more advanced stage of evolution - quarterly filing of results under Sebi's LODR regulations began 26 years ago on March 31, 2000, whereas the US has had a quarterly reporting framework since 1970.
