In recent discussions surrounding financial transparency, some influential voices, including former President Donald Trump, have advocated for reducing the frequency of corporate earnings reports from quarterly to semiannual, arguing that this shift would foster long-term strategic thinking. Proponents believe that diminishing quarterly scrutiny allows executives to prioritize sustainable growth over short-term earnings manipulations. However, this perspective dangerously romanticizes the notion that fewer reports will inherently result in better corporate governance. In reality, quarterly reporting functions as a vital accountability mechanism, ensuring continuous transparency and holding management accountable for their financial decisions. Removing this cadence risks sacrificing the immediacy of information that investors rely on to make informed choices, ultimately undermining trust in the market’s integrity.
The Illusion of Cost Savings and Market Revival
Trump’s argument that reducing reporting requirements could revive the declining number of public companies and cut costs simplistically overlooks the complex dynamics of public markets. While compliance costs are indeed burdensome, stretching from legal fees to regulatory obligations, they also serve as safeguards against reckless corporate behaviors. Pushing for less frequent reporting might appear to streamline operations, but it could have counterproductive effects by discouraging transparency and fostering environments ripe for misconduct. Interestingly, the decline in U.S. public listings—shrinking from over 7,000 companies in the late 20th century to fewer than 4,000 in 2020—reflects broader issues like investor fatigue, regulatory overreach, and a preference for private funding. The notion that easing reporting standards will reverse this trend is flawed; instead, it risks deepening the decline by promoting opacity rather than openness.
The International Context and American Exceptionalism
While Trump highlights differences between the U.S. and countries like China, the U.K., and the EU, the comparison is often:
misguided. Countries such as the UK and EU members already follow semiannual reporting regimes, and some offer quarterly reports at companies’ discretion. However, these regimes are complemented by other regulatory safeguards designed to maintain transparency. China’s practice of quarterly reporting underscores a different approach—focused on immediate oversight rather than long-term management philosophy. More importantly, conflating reporting frequencies with corporate health oversimplifies what truly sustains resilient markets. The allure of the U.S. market to international firms—particularly European companies seeking higher valuations—has more to do with liquidity, investor diversity, and legal protections than with the rigidness of reporting schedules. Dropping quarterly reports might reduce compliance costs but could also diminish the U.S. market’s reputation for rigorous oversight, which is integral to its global status.
The Risks to Investors and the Persistence of Transparency
One of the most critical flaws in the push to eliminate quarterly disclosures is the potential erosion of investor protections. Governance groups like the Council of Institutional Investors warn that less frequent reporting could weaken the mechanisms by which institutional investors, such as pension funds, monitor their investments. Quarterly reports serve as a feedback loop, allowing stakeholders to detect early warning signs of financial distress or managerial misconduct. Without this regular window into company performance, investors are left navigating increased information asymmetry, exposing themselves to heightened risks. Moreover, foreign private issuers currently benefit from exemptions from mandatory quarterly reporting; yet, studies suggest that these loopholes can undermine effective governance and trust. If a significant portion of the U.S. market adopts a semiannual model, it may inadvertently foster an environment where short-term market movements are less scrutinized, undermining the transparency pillar that has long supported U.S. capital markets’ global leadership.
The push to relax reporting standards in pursuit of short-term economic efficiencies dangerously underestimates the importance of ongoing transparency for fostering trust and stability. While cost reduction may sound appealing on paper, the broader consequences—diminished investor confidence, increased potential for malfeasance, and a weakening of market discipline—far outweigh any superficial gains. The U.S. public markets owe their strength to rigorous oversight and accountability mechanisms, not to superficial efforts to streamline regulations. Abandoning quarterly reporting risks transforming a well-functioning system into one driven by opacity and short-term gains, ultimately damaging the very fabric that has made American markets a cornerstone of global finance. Embracing long-term visions doesn’t mean neglecting accountability; rather, it demands strengthening the very transparency that sustains investor trust.