Investor groups have reportedly expressed their support for the continuation of quarterly reporting by publicly traded companies in response to a proposal advocating for semiannual reporting.
The investment industry is pushing the U.S. Securities and Exchange Commission (SEC) to uphold the current requirement for quarterly reports from publicly listed companies, Reuters reported on Tuesday. Most public comments on the proposal submitted by Monday’s deadline supported keeping the current quarterly reporting requirement.
The feedback to the proposal allowing companies to switch to semiannual reporting underscores a split between investor demands for increased disclosure and corporate boardrooms’ wish to ease the pressures of earnings season.
Investors maintain that their requirement for corporate disclosures to make informed investment decisions surpasses any advantages companies might reap from decreased reporting obligations. Currently, companies are obligated to pay for the computation and auditing of their operating results every three months, an expense they are keen to reduce.
The Investment Company Institute said a survey of 14 members managing $6.1 trillion in assets found that 91% consider quarterly reports important, with 62% rating them highly important and 29% moderately important. Respondents said quarterly earnings statements and management discussions are especially valuable for evaluating companies’ financial health and operating performance.
The SEC did not immediately respond to Benzinga‘s request for comments.
Read Also: SEC Enforcement Probes Continuation Vehicles In Private Equity
SEC Eyes Semiannual Reporting
The U.S. has required companies to file quarterly financial reports since 1970, while many other countries mandate financial disclosures only twice a year. The SEC proposed allowing publicly traded companies to shift from quarterly to semiannual reporting, following President Donald Trump‘s call for the same.
The regulator said the change could reduce compliance costs and discourage short-term decision-making but warned it may leave investors less informed, undermine market fairness, and weaken oversight of corporate conduct.
Pushback Against Biannual Reports
The push for semiannual reporting has been met with significant resistance. In April, Sam Rines, a macro strategist at WisdomTree Asset Management, warned that companies opting for biannual reporting could face selling pressure and valuation cuts from active investment managers. Rines said convincing corporate boards to adopt the shift would be difficult, as they must balance cost savings against the risk of negative investor perception.
Earlier in the same month, Reuters reported that investment firms and hedge funds, including Two Sigma Investments and D.E. Shaw, also voiced their opposition to the proposal, citing concerns over reduced flow of crucial financial information for investors in public companies.
On the other hand, while broadly supporting the proposal to support capital markets, JPMorgan Chase (NYSE:JPM) Chief Financial Officer Jeremy Barnum had said that the company would still provide quarterly guidance through calls with analysts and investors.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
