Reevaluating European Corporate Transparency: Valuation Dynamics in a Post-Quarterly Reporting Era

The European corporate reporting landscape is undergoing a seismic shift, challenging long-held assumptions about transparency, valuation, and investor behavior. For decades, quarterly reporting has been a cornerstone of financial markets, providing a rhythm for earnings calls, analyst forecasts, and investor expectations. Yet, recent regulatory and academic trends suggest that this cadence may be unsustainable—or at least suboptimal—for fostering long-term value creation. As European firms and regulators experiment with semi-annual reporting frameworks, the implications for valuation metrics, ESG integration, and market dynamics are becoming increasingly clear.

The Case for Deregulating Quarterly Reporting

The European Union's 2013 decision to abolish mandatory quarterly reporting for firms listed on regulated markets marked a pivotal moment in corporate governanceHow often and how much information should publicly listed firms report?^[3]. This move, initially introduced in 2004, was reversed amid concerns that quarterly disclosures incentivized short-term decision-making, particularly in R&D-intensive industries where innovation cycles span years rather than quartersCorporate reporting frequency and long-term value creation^[1]. A 2025 paper from the Norwegian Sovereign Wealth Fund argues that shifting to semi-annual reporting, supplemented by continuous material disclosures, could align managerial and investor behavior with long-term value creationCorporate reporting frequency and long-term value creation^[1]. By reducing the frequency of formal reporting, firms are freed from the “quarterly tyranny” of meeting short-term earnings targets, potentially redirecting resources toward sustainability initiatives, R&D, and strategic reinvestment.

However, the transition has not been without friction. Studies of the deregulation's impact on the Vienna Stock Exchange reveal that firms often reduced the content of their quarterly reports—omitting critical notes and disclosures—rather than ceasing them entirelyCorporate reporting frequency and long-term value creation^[1]. This suggests a lingering demand for transparency among investors, who appear to value frequent updates for liquidity and risk assessment. Indeed, research from the Tel-Aviv Stock Exchange found that firms switching to semi-annual reporting experienced a 2 percent average drop in stock price around the announcement date, while those retaining quarterly reporting saw gains of 2.5 percentFirms’ sustainability, financial performance, and regulatory changes: Evidence from European firms^[2]. Such findings underscore the market's reliance on regular disclosures to mitigate information asymmetry and maintain confidence.

ESG Reporting: A New Lens for Valuation

While the debate over reporting frequency continues, a parallel revolution is reshaping how European firms are valued: the integration of ESG (Environmental, Social, and Governance) metrics into corporate reporting. The EU's Corporate Sustainability Reporting Directive (CSRD) and Taxonomy Regulation now mandate detailed disclosures on sustainability practices, requiring firms to quantify environmental and social impacts alongside financial performanceFirms’ sustainability, financial performance, and regulatory changes: Evidence from European firms^[2]. This shift is not merely regulatory—it reflects a growing recognition that ESG factors are material to long-term valuation.

Recent studies highlight a complex relationship between ESG reporting and financial outcomes. A 2023 analysis of 1,816 European firms found that those with lower ESG reputational risk experienced reduced information asymmetry, stronger financial performance, and greater resilience during exogenous shocks like the COVID-19 pandemicFirms’ sustainability, financial performance, and regulatory changes: Evidence from European firms^[2]. Conversely, a 2024 study noted no significant aggregate impact of mandatory sustainability disclosures on firm value, suggesting that ESG's influence may vary by industry or implementation qualityEffect of mandatory sustainability performance disclosure on firm value^[4]. For energy-intensive sectors, where regulatory scrutiny is acute, robust ESG reporting has been linked to lower capital costs and enhanced reputational capitalCorporate reporting frequency and long-term value creation^[1].

Yet, the interplay between ESG reporting and changes in financial disclosure frequency remains underexplored. A 2025 report by Rödl & Partner notes that while ESG factors are increasingly embedded in corporate valuation models, their integration into traditional metrics like discounted cash flow (DCF) or price-to-earnings (P/E) ratios is still nascentCorporate reporting frequency and long-term value creation^[1]. This gap is particularly pronounced for firms operating under semi-annual reporting regimes, where the reduced cadence of financial updates may complicate the timely communication of ESG performance.

Valuation Metrics in a Semi-Annual World

The shift from quarterly to semi-annual reporting has tangible effects on valuation dynamics. For instance, firms that reduced their disclosure frequency post-2013 saw a decline in stock liquidity and a rise in information asymmetry, according to a 2024 study of German marketsEffect of mandatory sustainability performance disclosure on firm value^[4]. This aligns with broader investor preferences: frequent disclosures are often associated with higher P/E ratios, as they provide a clearer picture of a firm's trajectory. However, the trade-off between transparency and cost efficiency cannot be ignored. Firms that adopted semi-annual reporting reduced external auditing hours by 19.8 percent and annual audit fees by 16 percentFirms’ sustainability, financial performance, and regulatory changes: Evidence from European firms^[2], suggesting potential savings for smaller or less capital-intensive companies.

The challenge lies in balancing these benefits with the risks of reduced transparency. For ESG-focused investors, the semi-annual cadence may delay critical updates on sustainability performance, potentially undermining the alignment between corporate strategy and investor expectations. This is particularly relevant in energy-intensive industries, where ESG rating divergence among agencies can amplify uncertainty and volatilityCorporate ESG rating divergence and excess stock returns^[5].

Toward a Balanced Framework

The future of European corporate reporting likely lies in a hybrid model that combines the flexibility of semi-annual reporting with the transparency of continuous material disclosures. Regulatory frameworks must also address the standardization of ESG metrics, ensuring that sustainability data is comparable, verifiable, and actionable for investors. As noted in a 2025 study by the Norwegian Sovereign Wealth Fund, aligning reporting frequency with the “natural rhythms” of a firm's industry—whether it be technology, energy, or manufacturing—could optimize both governance and valuation outcomesCorporate reporting frequency and long-term value creation^[1].

For investors, the key takeaway is clear: traditional valuation models must evolve to incorporate non-financial metrics. Firms that master the art of communicating ESG performance alongside strategic financial updates will likely outperform peers in an era where sustainability and long-termism are paramount.