Key facts
- Investor groups are urging the SEC to maintain its requirement for quarterly financial reports from public companies.
- The SEC had proposed allowing companies to switch to semiannual reporting, a move supported by some industry players like JPMorgan and Nasdaq.
- Opponents, including the Investment Company Institute and Managed Funds Association, argue that quarterly disclosures are vital for investors and corporate oversight.
- The American Accounting Association warned that less frequent reporting could lead to undetected accounting issues.
- The U.S. has required quarterly reports since 1970, while other countries permit semiannual disclosures.
Investor advocacy groups are urging the U.S. Securities and Exchange Commission (SEC) to maintain its current requirement for quarterly financial reporting from publicly traded companies, according to public comment letters. The SEC had proposed allowing companies to opt for semiannual reporting, a move initiated by President Donald Trump, with the aim of reducing compliance costs and deterring short-termism.
However, investor organizations argue that the benefits of more frequent disclosures outweigh any relief from reporting burdens. They contend that timely and detailed financial information is essential for making informed investment decisions and for monitoring corporate conduct effectively. The Investment Company Institute, representing mutual and exchange-traded funds, found that a significant majority of its members consider quarterly reports either highly or moderately important. Similarly, the Managed Funds Association, which represents hedge funds and asset managers, stated that timely, material information is crucial for investors.
The American Accounting Association expressed concern that semiannual reporting could allow accounting problems to go undetected for longer periods, potentially increasing remediation costs later. While some entities like JPMorgan and Nasdaq have welcomed the proposal, suggesting it could bolster capital markets and encourage a longer-term perspective, the dominant sentiment from investor groups is a call to preserve the existing quarterly reporting standard. The United States has mandated quarterly reports since 1970, a practice that differs from some other countries allowing semiannual disclosures. The SEC has not provided a timeline for its next steps regarding the proposal.