Key Points
- The SEC is considering a rule that would make quarterly earnings reports optional for publicly traded companies.
- The proposal could allow firms to report financial results twice a year instead of every three months.
- Regulators say the change could reduce compliance burdens and encourage more companies to remain publicly traded.
The U.S. Securities and Exchange Commission is considering a plan that would modify its rules requiring financial disclosures from publicly-traded companies.
The proposal, first reported by the Wall Street Journal on Monday, would allow publicly-traded companies to disclose their financial earnings twice per year. Currently, companies are required to disclose their earnings on a quarterly basis, or four times per year.
If the proposal is published, it will enter a public comment period that typically lasts at least 30 days. During that time, investors, companies and other market participants would have an opportunity to submit feedback to the regulator. After the comment period concludes, the SEC’s commissioners would vote on whether to adopt the rule. There is no guarantee the proposal will ultimately be approved.
The change under consideration would not eliminate quarterly reporting altogether. Instead, it would make quarterly disclosures optional, allowing companies that wish to continue issuing earnings reports every three months to do so voluntarily.
In preparation for the potential rule change, SEC officials have been discussing the issue with major stock exchanges to determine how their listing requirements might need to be adjusted. The Wall Street Journal previously reported that the regulator has begun consulting with exchange officials ahead of the proposal’s release.
Quarterly reporting has been a cornerstone of financial disclosure for U.S. public companies for more than 50 years. The regular schedule is widely viewed as an important transparency mechanism that provides investors with timely information about corporate performance and financial health.
Supporters of less frequent reporting argue the current system places significant administrative and compliance burdens on companies. Preparing quarterly filings can require extensive accounting, legal and regulatory work, particularly for smaller firms.
Advocates say easing reporting requirements could help address the long-term decline in the number of publicly traded companies in the United States. Some companies have cited the time-consuming and costly work associated with public reporting as a factor in deciding to remain privately held.
Numerous media and technology companies would be affected by the rules changes. In the tech sector, companies like Microsoft, Apple, Amazon, Alphabet (the parent of Google and YouTube), Meta (parent of Facebook and Instagram), Samsung and LG report their earnings on a quarterly basis.
The parent companies of all five major broadcast networks — ABC, CBS, NBC, Fox and the CW Network — also report their earnings on a quarterly basis, as do streaming-focused companies like Roku and CurosityStream.
