President Donald Trump recently revived a proposal he first raised during his earlier time in office: eliminating the requirement for publicly traded US companies to release quarterly earnings reports, instead mandating semi-annual disclosures. The idea is framed as a way to reduce compliance costs and allow firms to focus on long-term strategy rather than the next three months of results. While the notion has intuitive appeal, it also raises serious questions about transparency, market efficiency, and the balance of power between corporate managers and investors.
Quarterly reporting has long been criticized for reinforcing what economists and corporate governance experts call short-termism. Executives are often compelled to manage earnings targets rather than allocate capital in ways that maximize long-term value. Research has shown that managers sometimes defer or cancel value-accretive projects — such as investments in research and development, plant expansion, or workforce training — because the costs depress quarterly earnings per share, even when the long-term benefits are clear. Moreover, the cycle of “earnings season” can distort managerial incentives. Companies issue forward guidance, analysts build consensus estimates, and then the market reacts sharply to whether results beat or miss expectations—sometimes by mere pennies per share. This fosters a culture of earnings management, where discretionary accounting choices or one-off cost cuts are used to smooth results. For firms, particularly smaller ones with limited resources, the compliance burden of quarterly filings adds costs in legal, accounting, and investor relations functions.
Critics argue that the US practice places firms at a competitive disadvantage relative to companies in Europe, where semi-annual reporting is the norm. If managers are less tethered to near-term EPS performance, they can operate with a longer horizon, aligning corporate strategy more closely with innovation cycles, capital investment horizons, and structural shifts in the global economy. Trump himself emphasized this when he contrasted America’s “quarterly mentality” with China’s ability to take a multi-decade view.
But while quarterly reporting is imperfect, reducing disclosure frequency to twice a year also carries risks. The most immediate concern is the information gap that would emerge between formal disclosures. Markets function best when information flows efficiently; semi-annual reporting would leave investors with fewer data points on which to assess performance and risk. For institutional investors, this would complicate portfolio management, while retail investors might face heightened uncertainty. A longer gap between reports could also encourage information asymmetry. Corporate insiders would continue to have access to detailed, current data, while public shareholders would have to wait several more months for official numbers. This creates greater potential for insider trading and selective disclosure. Regulators might respond with stricter interim disclosure requirements — undermining the very cost savings the proposal seeks.
Another trade-off lies in the effect on market discipline. Quarterly scrutiny provides a form of ongoing accountability, pressuring management teams to correct underperformance swiftly. With only two reporting windows each year, underperforming strategies could persist unchecked for longer, leaving shareholders less empowered to intervene or apply pressure.
Finally, the reporting cycle serves an important signaling function. Frequent results allow the market to incorporate new information into valuations in a timely way, making securities prices more reflective of underlying fundamentals. Lengthening the reporting interval could increase volatility around the semi-annual dates and weaken the process of continuous price discovery that is central to modern financial markets.
The choice, therefore, is not a simple one between costly, short-termist quarterly reporting and efficient, long-termist semi-annual reporting. It is instead a trade-off between transparency and accountability on the one hand, and managerial flexibility and cost savings on the other. Moving to six-month reporting would relieve companies of some compliance burdens and potentially encourage longer-term thinking, but at the expense of efficient pricing and access to information. It is also worth noting that many of the most pernicious aspects of quarterly reporting stem not from the reporting itself, but from the ecosystem of earnings guidance, analyst estimates, and media scrutiny that has grown up around it. Companies are not legally required to issue quarterly guidance; many do so voluntarily. Some firms have already chosen to scale back on forward guidance or to emphasize alternative performance metrics better aligned with long-term value creation.
Rather than imposing a one-size-fits-all mandate, regulators could consider a more flexible approach. Boards of directors, executives, and shareholders could be empowered to decide the frequency and form of reporting most appropriate to the firm’s business model, shifting strategies, and unique investor base. In such a system, one company might continue to issue quarterly results to signal discipline and transparency, while another might opt for semi-annual or even annual disclosures coupled with robust narrative reporting. Some firms might even experiment with ad hoc, event-driven earnings releases, providing updates only when material developments warrant disclosure rather than on a fixed timetable. Investors, in turn, could vote with their dollars, allocating capital toward the firms whose disclosure practices best match their preferences for transparency and time horizon. This would effectively turn reporting cadence into a new dimension of corporate competition.
In the end, the question is less about whether quarterly or semi-annual reporting is “better” and more about whether disclosure practices can themselves evolve into a competitive advantage in attracting and retaining shareholder capital.
