For 55 years U.S. public companies have been required to submit financial reports on a quarterly basis. President Trump recently revisited the idea that U.S. public companies be allowed to report their financial results semi-annually instead of quarterly, a proposal he first introduced in 2018.  Just yesterday, SEC Chair Paul Atkins wrote in an OpEd in the Financial Times that he was fast-tracking the President’s proposal arguing that the market should “…dictate optimal reporting frequency based on factors such as the company’s industry, size and investor expectations.”

Some experts agree that lengthening the period of time in which companies are obligated to report their financial performance would save money, free up time that has historically been allotted to earnings preparation and disclosures, and most importantly – allow executives to manage their businesses for the long-term instead of focusing on meeting quarterly estimates. Others suggest that delaying financial reporting would result in less transparency and drive volatility. Retail investors especially may feel out of the loop given their lack of access to management that institutional investors have historically enjoyed.  

But what would it really mean? Will companies stay silent for longer periods of time to take advantage of a “communication hibernation” period? Or will they view this as an opportunity to go above and beyond when communicating with stakeholders?

Devin Sullivan, Managing Director at The Equity Group, commented, “Timely data is oxygen for investors.  A regulation change like this should actually encourage companies to enhance and be more creative with their public communications in order to maintain visibility, lower their cost of capital by making sure accurate and up-to-date information is fully digested by the market, and stay ahead of rumors introduced by competitors or short sellers. Companies could also maintain good relations with retail investors by crafting new forms of communications that engender a spirit of respect for this increasingly important shareholder base.”     

Sullivan went on to say that companies could incorporate these disclosures in connection with investor conference participation or Non-Deal Roadshows. Less time-consuming forms of investor communication including fireside chats, CEO videos, and social media disclosures may also be utilized to maintain transparency – all of which would need to be framed within SEC guidelines.

“While companies would likely benefit from semi-annual reporting, this change would not absolve them from their responsibility to keep investors informed of corporate developments, material and otherwise,” Sullivan concluded. 

Lena Cati, Senior Vice President at The Equity Group, noted that a pivot from regulations that have been in place since 1970 would offer an opportunity for U.S. companies to mirror the approach of their foreign counterparts in enhancing their communications beyond what is required. 

“Most countries in Europe operate on this standard, and we help our European clients differentiate themselves and appeal to U.S. investors by providing a steady stream of information during the quarterly windows when a filing is not required, said Cati. “If there is a regulation shift here in the U.S., we would apply this same cadence and strategy for our domestic clients. This approach fosters transparency, maintains investor engagement year-round, and reinforces trust.”

Ultimately, public markets are built on trust between investors and issuers. The frequency of corporate disclosures should not influence that bond nor should it serve as a roadblock on the path towards enacting change.