According to Forbes, U.S. financial regulators are preparing to modify or rescind the 55-year-old rule requiring public companies to issue formal financial reports every 90 days, with full implementation expected by 2028. The SEC’s move follows similar reversals by the European Union in 2013, the UK in 2014, and Japan in 2024, leaving the U.S. and Canada as the last major economies maintaining mandatory quarterly reporting. Business leaders including Jamie Dimon, Warren Buffett, and Larry Fink have criticized the current system for encouraging “short-termism” that sacrifices long-term strategic investments to meet quarterly targets. Meanwhile, studies from the EU and UK suggest semiannual reporting doesn’t impair company performance and may even improve financial reporting quality. This fundamental shift represents the most significant change to corporate disclosure since the requirement was enacted in 1970.
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The Strategic Imperative Behind the Change
The push to eliminate quarterly reporting isn’t just regulatory reform—it’s a fundamental rethinking of how public companies should be managed. For decades, executives have been caught in what Goldman Sachs CEO David Solomon describes as a cycle where “today’s culture of quarterly earnings hysteria” forces companies to make suboptimal business decisions. The real business impact comes from what gets sacrificed at the altar of quarterly performance: R&D projects with multi-year payoffs, employee training programs, sustainable supply chain investments, and brand-building initiatives that don’t deliver immediate returns. When Unilever stopped quarterly reporting, their CEO noted they stopped having “discussions about whether to postpone the launch of a brand by a month or two or not to invest capital, even if investing is the right thing to do, because of quarterly commitments.” This reveals how the 90-day cycle has been distorting capital allocation decisions across corporate America.
The Market Efficiency Paradox
Traditional finance theory suggests more information always leads to better markets, but the evidence from countries that abandoned quarterly reporting tells a different story. The UK’s Kay Report found that when quarterly reporting was mandatory, it “had no material impact on the investment decisions of UK public companies”—and lifting the requirement similarly showed no statistically significant difference in corporate investment levels. More surprisingly, studies show that semiannual reporting is associated with higher accruals quality, reduced manipulation, and improved earnings persistence. This creates a paradox: less frequent reporting might actually produce better information by reducing the pressure to manage earnings and manipulate accounting schedules to hit artificial targets.
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Global Competitive Implications
The timing of this shift is crucial as American companies face intensifying global competition, particularly from China where companies operate on much longer strategic horizons. While U.S. firms have been optimizing for quarterly results, competitors in markets without quarterly pressures have been making bold, long-term bets in areas like artificial intelligence, renewable energy, and semiconductor manufacturing. The EU’s 2013 Transparency Directive explicitly linked quarterly reporting reduction to the need to “encourage sustainable value creation and long-term oriented investment strategy.” As the regulatory landscape evolves, U.S. companies that embrace the longer view could regain competitive ground against global rivals who haven’t been constrained by the 90-day earnings cycle.
The Investor Adaptation Challenge
The transition will force a fundamental restructuring of how institutional investors analyze and value companies. The entire ecosystem of sell-side analysts, earnings models, and investment strategies built around quarterly results will need to adapt. However, this could ultimately benefit long-term investors by reducing the “earnings game” volatility that disadvantages retail investors. As market participants adjust, we’re likely to see increased focus on non-financial metrics, strategic milestones, and innovation pipelines rather than quarterly EPS beats. The most sophisticated investors may actually gain an advantage by developing better frameworks for assessing long-term value creation beyond the quarterly noise.
Implementation Risks and Unintended Consequences
While the evidence from other markets is encouraging, the transition carries significant execution risks. Companies will need to develop new communication strategies to maintain investor confidence during the longer intervals between formal reports. There’s also the danger that without quarterly discipline, underperforming management teams might face less accountability. The experience from other markets shows that voluntary quarterly reporting will likely continue among companies with strong investor relations programs and those in sectors where frequent updates are expected. The key will be finding the right balance between reducing short-term pressure and maintaining sufficient transparency to ensure market discipline functions effectively.
