SEC's Semi-Annual Reporting Plan Sparks Clash Between Corporate Flexibility and Investor Transparency

The U.S. Securities and Exchange Commission (SEC) is advancing a proposal to shift corporate financial reporting from quarterly to semi-annual disclosures, a move aligned with President Donald Trump’s advocacy for easing regulatory burdens on businesses. Paul Atkins, the SEC’s chairman, confirmed the agency’s intent to propose the rule change during an interview with CNBC’s Squawk Box, emphasizing that the shift could grant companies greater operational flexibility. Under the proposed framework, firms would retain the option to maintain quarterly reporting or adopt a six-month schedule, with market dynamics determining the optimal cadence for shareholder communication.

Current regulations mandate quarterly reports, though earnings forecasts remain voluntary. The SEC’s proposal, if adopted, would mark a significant departure from established norms. Proponents argue that semi-annual reporting could reduce the emphasis on short-term performance metrics, allowing companies to prioritize long-term strategic goals. Atkins highlighted that foreign private issuers already employ semi-annual reporting, noting a growing consensus that quarterly disclosures may incentivize short-termism. The agency’s Republican-majority composition (3-1, with one seat vacant) positions the rule change for potential approval via a majority vote.

Critics, however, warn that less frequent reporting could diminish transparency, disproportionately disadvantaging individual investors who lack the analytical resources of institutional counterparts. They argue that quarterly disclosures provide critical, real-time insights into corporate performance, which semi-annual reports might obscure. Conversely, supporters, including international entities like Norway’s sovereign wealth fund, contend that the shift could align U.S. practices with global trends and encourage sustainable corporate planning.

The debate reflects broader tensions between regulatory efficiency and market accountability. While the SEC’s proposal aims to reduce compliance costs and administrative strain on companies, it also raises questions about investor access to timely information. The agency’s rationale for the change—citing the need to “save money and allow managers to focus on properly running their companies”—resonates with business leaders seeking to minimize regulatory friction. However, the potential for reduced scrutiny could amplify risks for markets reliant on rapid data to assess corporate health and market trends.

If implemented, the rule would reshape U.S. financial reporting standards, bringing them closer to international norms. Yet, the ultimate adoption of semi-annual reporting by firms will depend on investor expectations and market demand. Companies might retain quarterly disclosures if stakeholders perceive them as essential for transparency, while others could embrace the flexibility to allocate resources to long-term innovation. The SEC’s proposal thus represents a pivotal test of market adaptability and the balance between regulatory oversight and corporate autonomy.

Source: [1] SEC Eyes Trump-Fueled Shake-Up in Earnings Report Rules (https://www.newsmax.com/newsfront/sec-earnings-report/2025/09/19/id/1227134/)