Push to End Quarterly Reports Points to Waning Investor Clout

A renewed drive to end quarterly reporting would potentially save public companies time and money—but investors worry such a shift would worsen an increasingly opaque environment characterized by dwindling shareholder power.

The Long-Term Stock Exchange, a national securities exchange that launched in 2020, plans to petition the Securities and Exchange Commission in the next couple of weeks to bring public company fiscal reporting requirements down to twice a year, said Bill Harts, LTSE’s chief executive officer.

The semiannual reporting initiative—which became an SEC priority after President Donald Trump backed it in a social media post Monday—is seen as a way for companies to focus on long-term value instead of short-term results. But fewer reports could starve info-hungry investors who are already battling pro-business initiatives on multiple fronts.

An SEC spokesman said the agency “is prioritizing this proposal to further eliminate unnecessary regulatory burdens on companies.” To change the current schedule, the agency would likely undertake a rulemaking process, which includes a formal proposal and public comment period.

The agency has already taken deregulatory steps this year and recently included a proposal to “rationalize disclosure practices” in its regulatory agenda.

If implemented, a six-month schedule would cut costs and save time for publicly traded companies, especially smaller ones, and give more private companies the confidence to join their ranks, Harts said. But Meagan Reda, a partner at Olshan Frome Wolosky LLP who represents activist investors, says the accountability and transparency risks aren’t worth the payoff.

Tariff impacts have started showing up in company filings, and general inflation is still a concern. Shareholders need more information right now, not less, Reda said.

“In quote-unquote normal items, there might be a rational discussion of the pros and cons,” said Bruce Herbert, founder and chief executive of ESG wealth manager Newground Social Investment. “But in this environment,” it’s harder to rationalize, he said.

Investors Praise Quarterly Data

A shift to semi-annual reporting would curtail investor access to corporate information at a time activists are already worried about weakened power.

A pro-business SEC in Trump’s second term has already withdrawn more than a dozen proposed rules, including one that would have strengthened ESG disclosures, and released guidance making it easier for companies to exclude certain shareholder proposals from proxy ballots. On Monday, the agency also backed ExxonMobil Corp.'s effort to hamstring activist investors by enlisting more retail investors to vote in line with leadership’s recommendations.

The fight over how much say shareholders should have is playing out in Congress, where the House Financial Services Committee is eyeing legislation to lessen shareholders’ influence over companies, especially when it comes to ESG.

Many financial modeling tools, which are used to create a full picture of a company’s performance and help investors make decisions, use quarterly data, Newground’s Herbert said.

“Quarterly data is much more consistent and accurate over time than larger gaps because too much can happen in the meantime,” he said.

Companies would also likely keep tracking quarterly data internally—it just wouldn’t be available to shareholders, Herbert said.

When the first Trump administration was considering moving toward semiannual reporting, institutional investors like BlackRock Inc. argued in favor of keeping quarterly requirements.

“We believe the potential loss in transparency and timely availability of information to investors would outweigh the potential benefits,” BlackRock said in comments to the SEC.

California pension fund CalPERS, the Council of Institutional Investors, and the International Corporate Governance Network expressed similar views.

Another “big three” institutional investor, State Street Investment Management, said in SEC comments that quarterly reporting protected investors, but that the requirements should be streamlined to preserve company resources.

Black Rock and State Street did not immediately respond to comment requests.

Companies Pushed for Reform

Public company listings have fallen by 50% since the 1990s, according to Columbia Business School research. This is partly because the overhead costs associated with going public—a large part of which is reporting—are too high, Harts said.

“It turns out that biannual reporting can be better not only for the companies but for investors as well” because it gives time for more complete information, he said.

Companies also wouldn’t have to report less frequently. A rule change would just give them the option.

When a similar rule change was on the table in 2019, companies that participated in the public comment period gave mixed feedback.

FedEx Corp., for one, said quarterly reporting allows stockholders to reliably evaluate performance. At the same time, it said, requirements have grown more complex, so there are opportunities to cut them down.

Quarterly reports, or 10-Qs, also aren’t the primary source for investor decision-making, Ball Corp. said in comments to the SEC around the same time.

“The cycle of preparing quarterly 10-Q filings is time-consuming, costly and distracts management from activities that would generate returns for investors,” Ball wrote. “Moving to semi-annual filings would help balance the benefit with the cost of preparing such filings.”

FedEx and Ball did not immediately respond to comment requests.

The financial cost of quarterly reporting isn’t the only concern for companies. Less information could actually hurt them long-term, said David Becher, a fellow at Drexel University’s Raj & Kamla Gupta Governance Institute.

Financial models would be less calibrated without frequent data, so companies’ volatility could spike, he said. That could mean a host of consequences.

“If I’m lending to you, yes, I’m a little more uncertain, so I want a risk premium,” Becher said of lenders.

The New York Stock Exchange, the world’s largest stock exchange, fell somewhere in the middle in 2019 comments to the SEC.

The exchange reviews quarterly reporting to monitor compliance—but practices could be changed to support semiannual reporting instead, it said.

“Investors need transparency, while the issuer side needs disclosure standards that focus on material information and are not unduly burdensome,” the exchange said. “These two needs are not in opposition.”