Investors oppose semiannual reporting, says poll

Investors mostly favor the continued use of quarterly reporting and rejected the Securities and Exchange Commission’s recent proposal for a semiannual reporting option, according to a survey.

Processing Content

The report, from the CFA Institute, polled a group of 2,500 members and investors from around the world and found strong investor support for retaining mandatory quarterly reporting, as well as significant concerns regarding the implications of reducing reporting frequency. The survey found 62% of respondents oppose replacing quarterly reporting with semiannual reporting, while 63% believe the benefits of quarterly reporting exceed their costs. 

Investors don’t believe that reducing reporting frequency would foster more long-term decision-making behavior among companies or investors. The vast majority (85%) of respondents identified management incentives and compensation structures as significantly more important drivers of long-term decision-making than a 90-day change in reporting frequency. Some 82% of the respondents support allowing voluntary quarterly reporting if semiannual reporting is adopted, but only 32% of respondents expect companies would continue reporting quarterly if reporting became optional.

“The survey results provide a clear and consistent message: Investors globally – not just in the U.S. – continue to view quarterly reporting as an essential feature of transparent, efficient, and trustworthy capital markets,” said Matthew Winters, senior director of corporate disclosures and information advocacy at CFA Institute, in a statement. “Respondents indicated that the benefits of quarterly reporting exceed its costs and expressed significant concerns that reducing reporting frequency could weaken comparability, increase information asymmetries, reduce transparency, and impair market efficiency. Perhaps most notably, investors do not expect a voluntary reporting regime to preserve today’s level of disclosure. Most respondents believe many companies would discontinue quarterly reporting if it became optional and that investors would ultimately receive less information, not more.”

Approximately 70% of the respondents oppose granting companies flexibility to determine or change their own reporting frequency. Nearly 85% are concerned with the implications for comparability between companies because of flexibility of reporting frequency and format. 

Support is lower for semiannual reporting for just smaller or recently listed companies than support for adopting it across the board, with investors citing the same concerns about comparability and complexity.

Investors overwhelmingly view earnings releases and Form 10-Q filings as complementary disclosures rather than substitutes, and 78% don’t want to abandon the Form 10-Q filing requirement in a voluntary quarterly reporting regime.

Investors expressed significant concerns regarding reducing reporting frequency, with a majority of respondents (60% to 80%, depending on the potential implication) expressing apprehension across a variety of implications. 

Investors believe six-month reporting intervals would be too long in the current markets and could increase the cost of capital, stock volatility, and information asymmetries. Respondents also cited reduced comparability across companies, potential reductions in dividend frequency, greater reliance on voluntary disclosures and non-GAAP measures, heightened risks of unequal information access across investors, delayed disclosure of negative information, and the potential for increased insider trading due to longer periods between mandatory disclosures.

Investors don’t believe that reducing reporting frequency would foster more long-term decision-making behavior among companies or investors. 

The debate is happening amid rapid advances in artificial intelligence that are transforming how financial information is produced, disseminated, analyzed and consumed, the report pointed out. Investors increasingly rely on AI-enabled tools to process corporate disclosures, while public companies increasingly use technology to prepare them. Against this backdrop, many investors find it difficult to reconcile proposals to reduce disclosure frequency with broader technological developments that have made information faster, cheaper, and easier to analyze than ever before.

“The central question raised by investors is simple: What investor-focused problem is the SEC attempting to solve? Investors are not asking for less information,” said Sandra Peters, senior head of corporate disclosures and information advocacy at CFA Institute, in a statement. “If anything, investors increasingly seek more timely information as companies navigate technological disruption, geopolitical uncertainty, economic volatility, and emerging risks.

Quarterly reporting has been a foundational element of the U.S. disclosure framework for more than five decades and, in many respects, is load-bearing regulation for investors. Any proposal to fundamentally alter that framework should be supported by robust empirical evidence, careful economic analysis, and meaningful engagement with investors before reducing access to timely, structured, and comparable information.”

The report recommends maintaining mandatory quarterly reporting requirements, limiting flexibility in reporting frequency, and preserving formal reporting requirements such as Form 10-Q if voluntary quarterly reporting is permitted. It also suggests regulators do much more empirical analyses regarding the effects of reducing reporting frequency on investors, capital formation, and market quality, along with a thorough evaluation of whether reduced reporting frequency has delivered favorable outcomes in other jurisdictions that have adopted it.