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- Trump’s Latest Push for Change
- Why This Time Is Different
- What Is a Quarterly Report?
- The Historical Context
- The Core Tension: Short-Termism vs. Transparency
- Arguments for Eliminating Quarterly Reports
- Arguments for Keeping Quarterly Reports
- Summary of Arguments
- The European Experience
- A Critical Distinction: Reporting vs. Guidance
- What Happens Next
For more than 50 years, quarterly earnings reports have set the rhythm of American capitalism. Every 90 days, publicly traded companies face a “moment of reckoning,” disclosing their financial performance in a ritual that shapes stock prices, executive careers, and investor confidence.
This practice of corporate transparency is now at the center of a fierce debate. A September 2025 proposal from the Trump administration to reduce the frequency of these reports has pitted the need for long-term corporate strategy against the market’s appetite for information.
Trump’s Latest Push for Change
The latest chapter in this debate began on September 15, 2025, with a post on President Donald Trump’s Truth Social platform. He called for a fundamental shift in corporate disclosure, stating that companies “should no longer be forced to ‘Report’ on a quarterly basis (Quarterly Reporting!), but rather to Report on a ‘Six (6) Month Basis'” subject to SEC approval.
President Trump’s stated rationale was twofold: a semi-annual system would “save money, and allow managers to focus on properly running their companies.”
He framed the issue as a matter of global competitiveness, contrasting the American focus on 90-day cycles with what he described as China’s “50 to 100 year view on management of a company.”
This was not Trump’s first attempt. A similar push during his first term in 2018 ultimately stalled after the Securities and Exchange Commission (SEC) sought public comment but implemented no changes.
Why This Time Is Different
What makes the 2025 proposal different is the immediate and receptive response from the regulatory body. The SEC, under Chairman Paul Atkins, a noted critic of what he views as overly burdensome corporate disclosures, quickly announced it was making the proposal a “priority.”
An SEC spokesperson confirmed the agency is pursuing a proposal to “further eliminate unnecessary regulatory burdens on companies,” signaling a significant alignment of political will with regulatory machinery that was absent in the previous attempt.
The proposed change does not require an act of Congress. It can be implemented through a majority vote of the SEC commissioners. The process would involve a formal rulemaking period, including a notice for public comment, which could take between six and twelve months to complete.
The administration’s push is bolstered by external allies. The Long-Term Stock Exchange (LTSE), a San Francisco-based marketplace that lists companies prioritizing long-term growth, announced it would petition the SEC to eliminate the quarterly mandate for all public companies, not just those on its exchange.
What Is a Quarterly Report?
To understand the debate, one must first understand the document at its center: the Form 10-Q. Mandated by federal securities laws, the 10-Q is a comprehensive report that publicly traded companies must file with the SEC for the first three quarters of their fiscal year.
The fourth quarter’s financial data is included in the more detailed annual report, known as the Form 10-K, which is also audited by an independent accounting firm. The 10-Q, by contrast, is typically unaudited but must still be prepared according to U.S. Generally Accepted Accounting Principles (GAAP).
Key Components of Form 10-Q
The key components of a Form 10-Q provide a snapshot of a company’s health and operations:
Financial Statements: This section includes the company’s income statement (showing revenues, expenses, and profit), balance sheet (assets and liabilities), and cash flow statement (how cash is generated and used).
Management’s Discussion and Analysis (MD&A): Often considered the heart of the report, the MD&A is a narrative section where executives explain the financial results, discuss business trends, highlight opportunities, and identify significant risks the company faces.
Disclosures on Risk and Legal Proceedings: Companies must update investors on any material changes to risk factors—such as competition, regulations, or market volatility—and disclose any significant ongoing legal challenges.
Internal Controls: Management must affirm its responsibility for maintaining effective internal controls over financial reporting, a measure designed to ensure accuracy and accountability.
The Historical Context
The mandate for this regular disclosure has a clear historical origin. The SEC implemented the quarterly reporting requirement in 1970. This decision was a direct response to the economic conditions of the era, when a post-World War II economic boom gave way to a recession.
Under the previous semi-annual system, companies that were thriving during the expansion were able to hide their shrinking profits and deteriorating financial health for up to six months during the downturn. This practice led to significant and unexpected investor losses.
The 1970 rule was specifically designed to reduce this “information asymmetry”—the gap between what company insiders know and what the public knows—by providing investors with more frequent and timely data to gauge a company’s prospects and protect their capital.
The Core Tension: Short-Termism vs. Transparency
The proposal to end quarterly reporting strikes at a core tension in modern capitalism: the conflict between fostering long-term value and ensuring immediate market transparency.
The Short-Termism Problem
On one side is the argument against “short-termism,” a term often used interchangeably with “quarterly capitalism.” This concept describes an excessive focus by corporate managers and financial markets on achieving short-term results, such as meeting quarterly earnings-per-share targets, often at the expense of long-term strategic goals.
Proponents of this view argue that the relentless pressure of the 90-day clock forces companies to underinvest in crucial areas like research and development (R&D), new technology, and employee training, because the costs of these investments depress short-term profits even if they are vital for future growth.
The consequences extend beyond corporate balance sheets. Research has shown that this pressure can lead companies to cut corners in ways that affect public welfare. One 2017 study found that firms at high risk of just missing their quarterly earnings expectations reported a significantly higher incidence of workplace injuries to the Occupational Safety and Health Administration (OSHA).
Further research has documented that when U.S. firms are under similar pressure, their release of toxins into the environment is markedly higher. This evidence elevates the discussion from a purely financial matter to one with direct implications for worker safety and environmental protection.
The Transparency Imperative
On the other side is the principle of transparency. Advocates for quarterly reporting argue that the health, fairness, and efficiency of capital markets depend on a steady, reliable flow of high-quality information to all participants.
They see the Form 10-Q as a cornerstone of this system, providing a regular, disciplined check on management that allows investors to make informed decisions and hold executives accountable. This level of transparency, they contend, is what makes U.S. markets the “gold standard” and is fundamental to maintaining investor trust.
Arguments for Eliminating Quarterly Reports
Advocates for moving to a six-month reporting cycle build their case on three main pillars: fostering long-term strategy, reducing regulatory burdens, and aligning with the views of prominent business leaders.
Encouraging Long-Term Investment
The central argument for less frequent reporting is that it would give corporate executives the “breathing room” to pursue strategic investments that are crucial for sustainable growth but may not yield profits within a single 90-day period.
This view is supported by a landmark study from McKinsey, which analyzed corporate performance from 2001 to 2014. It found that companies identified as managing for the long term achieved average revenue growth 47% higher and earnings growth 36% higher than their short-term-focused peers.
The behavioral impact of the current system is powerful. A 2005 survey of financial executives revealed that nearly half would reject a positive net present value project—meaning a profitable long-term investment—if undertaking it meant their company would miss its quarterly earnings forecast. This demonstrates a clear willingness among managers to sacrifice long-term value to meet short-term expectations.
Reducing Compliance Costs
The process of compiling, reviewing, and filing quarterly reports is a significant drain on corporate resources, both in terms of time and money. Data from Audit Analytics underscores this point, showing that average audit fees for U.S. public companies reached a 20-year high of $2.57 million in 2024.
Proponents of change argue that this high compliance burden contributes to the declining number of publicly listed companies in the U.S., as many businesses choose to remain private to avoid the quarterly “grind.” Easing this requirement, they contend, could encourage more initial public offerings (IPOs) and broaden investment opportunities for the public.
High-Profile Support
The call for change is echoed by some of the most influential figures in the business world. Former PepsiCo CEO Indra Nooyi’s conversations with President Trump reportedly helped spark his initial interest in the topic.
Tesla CEO Elon Musk has publicly criticized the “enormous pressure” that the quarterly cycle places on companies to make short-sighted decisions. Larry Fink, CEO of BlackRock, the world’s largest asset manager, has used his influential annual letters to CEOs to condemn the “culture of quarterly earnings hysteria.”
The Business Roundtable, a powerful association representing nearly 200 top U.S. CEOs, has also advocated for moving away from practices that encourage short-termism.
Arguments for Keeping Quarterly Reports
Opponents of the proposed change argue that dismantling the quarterly reporting system would be a “gigantic step backward” that would harm investors, destabilize markets, and weaken corporate accountability.
Protecting Investors
The primary argument for maintaining the status quo is the protection of investors. Proponents insist that investors need frequent and reliable data to assess a company’s financial health, identify emerging risks, and make informed decisions about where to allocate their capital.
As Sandra Peters of the CFA Institute, a global association of investment professionals, stated, “Six months is a long time in a world where information is currency to not have reporting.”
They point to the history of the 1970 rule, which was created precisely to solve the problem of companies hiding bad news from the public—a problem they fear could return if the reporting frequency is reduced.
Market Efficiency and Stability
More frequent reporting is strongly linked to more efficient markets. When information is released regularly, stock prices can adjust smoothly and more accurately reflect a company’s underlying value.
Research from Professor Yong Yu and his colleagues provides strong evidence for this. Their study of the period when U.S. companies were transitioning to quarterly reporting found that as reporting became more frequent, a company’s current stock price became a significantly better predictor of its long-term future earnings.
Critics of the proposed change warn that a six-month information gap would increase uncertainty and could lead to greater market volatility. With six months of news, developments, and performance being priced into the stock all at once on earnings day, the potential for massive, disruptive price swings—“bigger and more consequential” misses—would increase dramatically.
This increased uncertainty could, paradoxically, harm the very companies the policy aims to help. Investors price risk; less frequent information means more uncertainty. As a result, investors might demand a higher return for taking on that risk, which could lead to lower overall stock valuations and a higher cost of capital for businesses seeking to fund long-term projects.
Corporate Accountability
The 90-day reporting cycle serves as a powerful disciplinary mechanism for corporate management. The need to regularly report and explain performance forces a level of accountability.
A longer, six-month gap between formal disclosures could widen the information gulf between corporate insiders and the public, potentially increasing the temptation for illegal insider trading or allowing accounting irregularities, like those seen in the Enron and Xerox scandals, to go undetected for longer periods.
Summary of Arguments
| Arguments for Semi-Annual Reporting | Arguments for Quarterly Reporting |
|---|---|
| Encourages long-term strategic investment in R&D and innovation | Provides timely, essential information for investor protection and risk assessment |
| Reduces significant compliance costs (e.g., audit fees) and administrative burden | Enhances market efficiency, reduces information asymmetry, and supports accurate stock pricing |
| Frees up executive time to focus on strategic management over compliance | Deters accounting fraud and insider trading by reducing information gaps |
| May encourage more private companies to go public by lowering the regulatory barrier | Upholds the “gold standard” of U.S. capital markets, fostering investor trust and confidence |
| Alleviates pressure that leads to negative externalities like reduced worker safety | Provides a regular, disciplined mechanism for holding corporate management accountable |
The European Experience
The debate in the U.S. is not purely theoretical. The United Kingdom and the European Union provide a real-world experiment, having moved away from mandatory quarterly reporting in 2014 and 2013, respectively. The stated rationale was identical to the one now being advanced in Washington: to combat corporate short-termism and encourage a focus on long-term investment.
Mixed Results
The results, however, have been nuanced and offer a cautionary tale. Multiple academic studies analyzing the effects of the U.K.’s switch found that the move to semi-annual reporting had no material impact on the levels of corporate investment, R&D spending, or other long-term metrics. The primary promised benefit of the policy change did not appear to materialize.
At the same time, the shift was not without consequences for transparency. Studies found that firms that stopped issuing quarterly reports experienced a measurable decrease in coverage from financial analysts.
As one analysis summarized, moving away from the quarterly requirement “did not end corporate short-termism and earnings management, but nor did it destroy all transparency.”
Lessons for the U.S.
The European experience suggests that changing the reporting calendar is neither a panacea for short-termism nor an apocalypse for market transparency. It implies that the reporting cycle itself may be a less powerful driver of corporate behavior than either side of the debate believes.
The root causes of short-termism may lie deeper, in areas such as executive compensation structures that reward short-term stock performance, the pressures of shareholder activism, and broader market culture. This raises a critical question for U.S. policymakers: is changing the reporting calendar merely treating a symptom rather than the underlying disease?
A Critical Distinction: Reporting vs. Guidance
Perhaps the most sophisticated and often misunderstood aspect of this debate is the critical difference between corporate reporting and corporate guidance.
Reporting refers to the mandatory, legally required filing of historical financial results. The Form 10-Q is a backward-looking document of established facts.
Guidance, on the other hand, is a voluntary, forward-looking forecast that a company provides about its own expected future earnings. This is not a required filing but is often offered by executives during earnings calls to manage market expectations.
The Real Target of Criticism
This distinction is crucial because many of the most influential critics of “quarterly capitalism” have targeted guidance, not reporting. In their highly cited 2018 Wall Street Journal op-ed, investor Warren Buffett and JPMorgan CEO Jamie Dimon argued that quarterly earnings guidance “leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability.”
However, they were careful to clarify that their criticism did not extend to the reporting of actual results. They wrote, “Our views on quarterly earnings forecasts should not be misconstrued as opposition to quarterly and annual reporting. Transparency about financial and operating results is an essential aspect of US public markets, and we support being open with shareholders about actual financial and operational metrics.”
A Potential Misalignment
This reveals a potential misalignment at the heart of the current policy push. The intense pressure to “hit the number” largely stems from the existence of a specific, publicly stated “number” to hit—a number often established by the company’s own guidance.
The intellectual critique from respected figures like Buffett and Dimon, as well as from groups like the Council of Institutional Investors, is that this voluntary practice of forecasting creates a self-imposed trap.
Yet the political proposal from the Trump administration targets the mandatory reporting of historical facts. This suggests the current policy could be a blunt instrument that reduces valuable transparency for investors without addressing the core behavior—the issuance of short-term forecasts—that many believe is the true source of the problem.
What Happens Next
The path forward is now in the hands of the SEC. The agency must navigate competing interests while considering the real-world evidence from both academic research and international experience.
The regulatory process will likely include extensive public comment periods, giving investors, companies, and other stakeholders the opportunity to weigh in. The debate will ultimately come down to whether policymakers believe the potential benefits of encouraging long-term thinking outweigh the costs of reduced transparency.
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