How Often is Too Often? Examining Earnings Reports in Modern Capital Markets
In September 2025, the Trump administration revived a familiar idea that surfaces periodically in corporate governance circles. The proposal calls for reducing the frequency of mandatory earnings reporting for U.S. public companies from quarterly to semi-annual. The argument, as it has appeared for decades, runs that quarterly reporting forces executives to manage toward ninety-day horizons and therefore suppresses long-term investment in favour of earnings-per-share optics. Europe, so the logic goes, reports semi-annually and manages to take a longer view. Therefore, if American companies reported less often, their leaders might act more like stewards than speculators.
It is a coherent argument. It is also largely wrong, and the ways in which it is wrong matter more than whether any particular administration succeeds in implementing the policy. The case against quarterly reporting conflates two separate problems, attributes one to the wrong cause, and in proposing a remedy, makes the other materially worse. Short-termism in corporate decision-making is indeed real, but it is a governance problem instead of a reporting problem. Information asymmetry in public markets is also legitimate, and reducing disclosure frequency would widen it significantly. The costs would fall most heavily on those least equipped to bear them. In fact, the people most likely to champion less transparency are often those least likely to be harmed by it.
The European Proof Point Doesn't Prove What People Think It Proves
European markets are often cited as evidence that semi-annual reporting is effective, but this example is far more rhetorical than it is analytical. The EU's Transparency Directive and the UK's former Disclosure and Transparency Rules did not actually eliminate sub-annual reporting; instead, they introduced Interim Management Statements (IMS) as a middle ground between quarterly and semi-annual disclosure. IMS reports were largely narrative and qualitative as they offered high managerial discretion at the expense of little standardization. This made them closer to press releases than U.S. 10-Q filings, which include standardized GAAP financials and detailed earnings data enabling direct firm-to-firm comparisons. When the EU later made IMS voluntary, most firms dropped it altogether; research examining capital expenditure and R&D spending following the voluntarization of IMS found no statistically significant increase in either. In short, companies did not invest more when they reported less–they simply reported less.
Moreover, the comparison with Europe also overlooks a fundamental difference: the EU never had a U.S.-style quarterly reporting regime to scale back. In the United States, this debate concerns reducing disclosure from a well-established, auditor-reviewed system. In Europe, the discussion focused on whether relatively lighter interim disclosure requirements were sufficient within their existing regulatory environment. Treating Europe as a model for U.S. reform therefore misrepresents the baseline.
Short-Termism Is a Governance Problem
Still, those advocating for fewer reports are right about the pressures of short timelines. Executives face enormous expectations to deliver near-term earnings growth. Boards often reward quarterly performance in ways that can discourage investments with long payback periods. Most executive pay at large public companies remains tied to one-year performance metrics like EPS growth, ROE, and revenue targets. These create powerful disincentives for investments whose costs are front-loaded and whose returns accrue over multiple years.
For example, a CEO deciding whether to build a new manufacturing facility or fund a multi-year R&D program with a fifteen-year payback faces a compensation structure that penalizes the short-term earnings dip such projects create. This hurts the metrics that determine bonuses and performance reviews, no matter how often the company reports to the SEC. This misalignment is only worsened by the fact that return on invested capital varies widely by sector but rarely aligns with an annual performance review cycle. Infrastructure and utilities projects can take ten to twenty years to reach full payback, while even in faster-moving sectors like technology or consumer goods, meaningful capital investments usually require several years to generate positive returns.
Furthermore, the high price-to-earnings ratios of growth stocks like NVIDIA demonstrate that investors can and do value long-term cash flow potential. If quarterly reporting truly forced market myopia, firms with volatile short-term earnings but optimistic long-term prospects would be systematically undervalued. Instead, investors regularly pay a premium for NVIDIA’s future growth in AI and semiconductors. Addressing short-termism therefore requires reforming incentive systems: revising annual bonus structures and multi-year equity vesting schedules. However, this is far more difficult, less visible, and less convenient for the executives most vocal about fewer reporting requirements.
Who Actually Benefits From Less Disclosure
Large institutional investors maintain direct access to management through analyst days, non-deal roadshows, and continuous sell-side research. When a company goes from filing four times a year to two, a large asset manager with these resources only experiences a modest rise in uncertainty that they can mostly offset through existing channels.
Retail investors have none of these alternatives. They rely entirely on public filings for audited data on earnings trajectories, cash flow stability, changes to the balance sheet, and management’s forward-looking goals. Cutting reports in half doubles the time they operate on stale information, and during those gaps, institutions continue trading on fresh private insights. This inevitably widens the persistent information gap between professional and retail participants, not due to analytical skill differences, but to unequal structural support.
Additionally, research coverage of mid-cap and small-cap companies is already sparse. The economic model for analyst research relies on regular disclosure events to spark client interest and trading volume. Fewer reports mean fewer catalysts around which research can be organized and monetized, thereby leading to wider bid-ask spreads and lower transparency for investors. This is the opposite of what healthy public markets need.
The Connection to Private Markets
Reduced disclosure frequency would accelerate a major ongoing shift in the financial system that is already well underway: the migration of capital from public to private markets. The number of U.S.-listed public companies peaked in the late 1990s and has declined materially since, as firms stay private longer, IPO activity contracts relative to GDP, and private equity/credit assets under management have exploded in size. While multi-causal, this trend consistently features executives and founders viewing public listing as a burden-to-benefit tradeoff that favours avoiding the public route to limit disclosure burdens and litigation risk. Thus, some policymakers respond to the decline in public listings by loosening disclosure rules to make public markets resemble private ones.
Who Gets Left Holding the Wrong Lever
If the goal is to revive public markets and increase participation in wealth creation, the answer is not less transparency but stronger governance. Companies should align incentives with long-term performance by linking compensation to multi-year results, innovation progress, and sustainability goals that represent lasting enterprise value.
There is a greater opportunity hidden in this debate. In an era where confidence in institutions and markets is increasingly fragile, trust has become a form of competitive capital. Firms that communicate candidly and consistently through transparent earnings discussions and accessible investor relations differentiate themselves not just to investors, but to employees, regulators, and customers alike. Transparency invites scrutiny but compounds trust over time much like any other asset. In seeking to escape short-term pressure by reporting less often, firms may instead forfeit one of the few mechanisms left that boosts long-term confidence in markets.