The US Securities and Exchange Commission is preparing a proposal that would allow public companies to report earnings twice a year instead of the long-standing quarterly reporting requirement.
According to a report from The Wall Street Journal, the proposal could be released as soon as next month. Before publishing the rule, regulators have been consulting with major stock exchanges about how their listing requirements might need to change if companies are given the option to report results every six months instead of every quarter.
If the proposal is formally issued, it would enter the SEC’s rulemaking process, which includes a public comment period that typically lasts at least 30 days before the commission votes on whether to adopt the change. There is no guarantee the rule will ultimately be approved.
The plan would not eliminate quarterly reporting entirely. Instead, it would make quarterly disclosures optional, allowing companies to choose whether to continue publishing financial updates every three months.
The push to ease reporting requirements gained momentum last year after the Long Term Stock Exchange petitioned the SEC to eliminate mandatory quarterly earnings reports. Within days of the proposal, President Donald Trump and SEC Chairman Paul Atkins both voiced support for giving companies the flexibility to report results semiannually.
Quarterly earnings reports have been a core part of U.S. capital markets since 1970, when regulators introduced the Form 10-Q filing requirement to provide investors with regular updates on company performance.
Supporters of the change argue that quarterly reporting encourages excessive short-term pressure on corporate management and adds significant compliance costs for public companies. Advocates say reducing the frequency of required disclosures could help reverse the long-term decline in the number of publicly listed companies in the United States.
Critics, however, warn that less frequent reporting could weaken transparency and delay the release of important financial information that investors rely on to assess corporate performance and risk.
The United States is somewhat of an outlier in requiring quarterly reporting. The European Union ended its mandatory quarterly disclosure rule in 2013, and the United Kingdom removed its requirement several years later, though many companies in those markets continue to provide quarterly updates voluntarily.
Source: https://cryptobriefing.com/sec-reporting-reform-proposal/
