SEC Considers Shift to Semiannual Reporting Schedule

The SEC has indicated its support for moving to a semiannual reporting schedule. While no formal rule change has been adopted, SEC Chair Paul Atkins has publicly stated that the SEC will propose a rule change to implement the new reporting schedule. These statements follow President Donald Trump’s call to do away with quarterly financial reporting in favor of semiannual disclosures. The proposal is part of the SEC’s ongoing discussions around market transparency, compliance costs, and the pressures of short-termism. Chair Atkins has indicated that if the rule change is approved, companies would be left to decide whether to switch to semiannual or stay with quarterly reporting. 

This is not the first we’ve heard of this, however. In 2018, the SEC, under then-Chair Jay Clayton, issued a Request for Comment on Earnings Releases and Quarterly Reports following public remarks by then‑President Trump in favor of a six‑month reporting schedule. While the request for comment did not outright endorse semiannual reporting, it expressed interest in exploring alternatives to mandatory quarterly filings, citing concern about short‑termism and burdens on companies, while also questioning the potential overlap with disclosures companies voluntarily provide to the public in the form of an earnings release furnished on Form 8-K. While no changes were ultimately implemented, industry debate has persisted. 

Calls to reduce reporting frequency have come from a mix of politicians, regulators, and prominent business figures over the years, including Hillary Clinton in her 2016 presidential campaign, as well as Larry Fink of BlackRock, Jamie Dimon of JPMorgan Chase, and Warren Buffet. There may be broad and bipartisan support for such a change. 

A shift to semiannual reporting would represent a significant change in U.S. securities disclosure practice that could take years to implement, given the lengthy rulemaking process, and will likely have both benefits and drawbacks. Additionally, it is unclear whether the SEC has authority to make this change without Congressional action. 

Section 13(a)(2) of the Securities Exchange Act of 1934 states that every issuer with § 12 securities must file with the SEC “such annual reports (and such copies thereof), certified if required by the rules and regulations of the Commission by independent public accountants, and such quarterly reports (and such copies thereof), as the Commission may prescribe [emphasis added].” So, Congressional action may be required to make the switch. 

Potential Benefits of Semiannual Reporting 

Reducing Short-Termism 

• Some have suggested that quarterly earnings cycles pressure management to focus on near-term results rather than long-term strategic initiatives. 
• A move to semiannual reporting may alleviate “managing to the quarter” and encourage sustained value creation. 

Reducing Compliance Costs 

• Preparing Form 10‑Q reports is resource‑intensive. Fewer filings may free up internal budgets and personnel, which could make a sizeable difference for smaller issuers. 

International Alignment 

• Many jurisdictions (e.g., the European Union and the United Kingdom) require only semiannual reporting and annual updates. 
• Harmonization with semiannual reporting countries may level the playing field for cross‑listed companies. 

Reduced Volatility 

• Some have argued that quarterly earnings releases can trigger short‑term market swings. Less frequent reporting may reduce volatility. 

Potential Drawbacks of Semiannual Reporting 

Reduced Transparency 

• Proponents of quarterly reporting have argued that it allows investors and analysts to assess performance and respond quickly to emerging trends. Longer gaps between reporting may reduce actionable information. 

Market Efficiency Risks 

• Less frequent standardized data may increase reliance on selective or non‑GAAP disclosures. 
• Less uniformity around the timing and disclosure of information may make comparability between companies more difficult and result in market uncertainty.  

Longer Periods of Material Nonpublic Information 

• With semiannual reporting, insiders may hold material nonpublic information (MNPI) for months before such information is disclosed to the public. 
• Insiders would need to exercise extra caution in personal trading to avoid the appearance of trading ahead of material announcements. 
• Longer gaps between disclosures may increase reliance on pre‑planned trades under Rule 10b5‑1 to satisfy liquidity needs (these plans may be executed according to preset instructions regardless of possession of MNPI at the time of execution). 
• To facilitate insider trading windows or mitigate MNPI risk, companies may choose to issue interim operational updates, press releases, or Form 8-K filings when material events occur. 

Investor Expectations 

• Institutional and retail investors have built financial models and monitoring systems based on quarterly updates; changing the frequency of reporting may reduce comparability and result in market uncertainty. 

Larger Single‑Event Volatility 

• Some have argued that with more information disclosed all at once, earnings days could produce more significant single‑day price movements. 

Potential Implications of Semiannual Reporting for Issuers 

Setting aside the potential long-term cost savings, moving to a semiannual reporting schedule would require companies to invest considerable time and resources upfront. In addition to revising and validating disclosure controls and procedures to adapt to longer reporting cycles, companies would need to modify their internal reporting systems, adjust their compliance procedures to ensure timely reporting of material events (possibly via Form 8-K), and undertake a comprehensive review of their corporate governance policies, including insider trading policies (particularly blackout windows and cooling off periods for 10b5-1 plans), communication policies, and confidentiality policies, to safeguard against regulatory breaches and maintain market trust. Communication strategies may need to shift toward more frequent voluntary updates and guidance to bridge gaps between filings. 

Ahead of a potential rule change, issuers, investors, and policymakers should carefully weigh reduced regulatory burden against the possible loss of timely transparency and market efficiency.