According to Forbes, U.S. financial regulators are preparing to modify or rescind the 55-year-old rule requiring public companies to issue formal financial reports every 90 days, with the SEC indicating elimination of quarterly reporting in favor of semiannual reports by late next year and full implementation expected by 2028. The move follows similar reversals by the European Union (which mandated quarterly reporting in 2004 but rescinded it in 2013), the UK (2007-2014), Singapore (17 years until 2020), and Japan (2003-2024). Surveys reveal consistent concerns about the cost and distraction of short-cycle reporting, with evidence linking the current system to short-term bias in corporate decision-making, including sacrificing long-term strategic investments and altering accounting schedules to meet quarterly targets. This fundamental shift represents one of the most significant changes to corporate disclosure requirements in decades.
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The Global Experiment We Already Ran
What’s particularly striking about this regulatory shift is that we already have extensive real-world data on what happens when countries abandon quarterly reporting. The international experience provides a natural laboratory that the SEC is wisely considering. When the EU moved to semiannual reporting in 2013, critics predicted disaster, but the EU’s Transparency Directive specifically cited the need to “encourage sustainable value creation and long-term oriented investment strategy.” The results have been telling: European markets didn’t collapse, companies continued to function, and investors adapted to receiving information on a different cadence.
More importantly, the voluntary behavior of companies in these markets reveals something crucial about information needs. Many EU firms continue reporting quarterly voluntarily because their investors demand it, while others shifted to semiannual reporting. This creates a market-driven approach where reporting frequency matches actual investor needs rather than regulatory mandates. The Kay Report in the UK identified this exact principle – that excessive reporting requirements can distort decision-making without necessarily improving market efficiency.
Beyond the Hype: What Actually Changes
The most compelling aspect of this shift isn’t the regulatory change itself, but how it will reshape corporate behavior and investor expectations. Companies will no longer have the artificial pressure of hitting 90-day targets, which often leads to what General Motors’ Vice-Chairman called “the father of many, many bad product decisions.” We’re likely to see several concrete changes: R&D cycles that aren’t artificially compressed to show quarterly progress, product launches timed for market readiness rather than earnings calendar considerations, and strategic acquisitions evaluated on multi-year horizons rather than immediate EPS impact.
For investors, the adjustment will be more profound than many anticipate. The elimination of quarterly reporting doesn’t mean less information – it means different information. We’ll likely see a rise in alternative metrics and KPIs that better reflect long-term value creation. Companies might provide more frequent updates on customer acquisition costs, product development milestones, or strategic initiative progress rather than the traditional revenue/earnings focus. The shift aligns with broader trends toward ESG reporting and non-financial metrics that many investors now consider equally important.
The End of the Earnings Game
One of the most significant but underdiscussed benefits is the potential reduction in what analysts call the “Earnings Game” – the quarterly ritual of earnings guidance, whisper numbers, and the resulting market volatility. This game particularly disadvantages retail investors who lack the resources and access of institutional players. The abnormal volatility around earnings announcements creates opportunities for manipulation and distracts from fundamental business performance.
As market observers have noted, the current system encourages companies to manage expectations rather than manage businesses. The shift to semiannual reporting could fundamentally change how companies communicate with markets, focusing on substantive progress rather than quarterly performance theater. This aligns with the growing recognition that market efficiency doesn’t necessarily correlate with reporting frequency but rather with information quality and relevance.
The Rocky Road to 2028
The transition won’t be seamless. We’re likely to see significant turbulence as companies, investors, and analysts adapt to the new normal. The first few years will involve experimentation with different reporting formats and communication strategies. Some companies will continue providing quarterly updates voluntarily, while others might use the flexibility to communicate differently entirely.
One major challenge will be the interim period where some companies report quarterly and others semiannually, creating comparability issues for investors and analysts. There will also be legitimate concerns about reduced transparency during the transition. However, as the ongoing debate illustrates, the current system has its own transparency problems, with companies often using accounting techniques to smooth quarterly results rather than reflect economic reality.
Where This Leads American Business
Looking beyond the immediate regulatory change, this shift represents something more fundamental: a recognition that the 20th-century industrial model of corporate reporting doesn’t serve 21st-century knowledge businesses well. Companies investing in AI, quantum computing, or pharmaceutical research operate on timelines that bear little relationship to quarterly cycles. The pressure to show progress every 90 days can be actively harmful to genuine innovation.
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The most successful companies in this new environment will be those that develop sophisticated communication strategies that balance investor needs with operational reality. We’re likely to see the rise of new roles focused on long-term value communication and the development of more nuanced metrics that reflect sustainable growth. This could ultimately make American markets more attractive to the next generation of innovative companies that have recently opted to stay private longer to avoid quarterly pressures.
As business leaders from President Obama to Jamie Dimon have argued, short-termism has been a persistent challenge for American competitiveness. This regulatory shift won’t solve that problem overnight, but it removes a structural barrier to long-term thinking. The companies that thrive in this new environment will be those that recognize that less frequent reporting isn’t about providing less information, but about providing better information focused on what truly drives long-term value creation.
