The quarterly reporting standard has long been a hallmark of investor transparency in the U.S. stock market.

Following the 1929 crash, the Securities Act of 1934 was created to regulate public companies and require them to provide detailed information to investors regularly.

By 1970, the SEC had increased the frequency of reporting to four times a year, a requirement which has remained unchanged until today.

However, that longstanding rule could see a major change, as it’s been reported that the SEC is currently drafting a proposal that would make quarterly reporting optional. 

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The quarterly reporting requirement has long been a foundational piece of investor transparency in the U.S. stock market. 

Following the 1929 market crash that led to the Great Depression, the U.S. Congress passed the Securities Act of 1934, requiring public companies to register with the Securities and Exchange Commission (“SEC”) and provide detailed financial information regularly.

The purpose of this act, and of the SEC, was to ensure investors had access to relevant information before making investment decisions and to regulate public companies.

By 1970, the SEC increased the frequency of reporting to four times a year, a requirement which remains unchanged today. 

Quarterly reports offer investors transparency on company performance, leading to fairer markets and valuations. Despite this, some have questioned this longstanding practice.

Critics say this standard pressures management teams to prioritize short-term gains over long-term growth. Moreover, these reports can be costly to prepare, especially for smaller firms.

That’s why in late-2025, the push to abandon this requirement gained momentum, as the Long-Term Stock Exchange submitted a petition to the SEC to do away with the quarterly reporting standard.

In response, President Trump reiterated a proposal from his first term to reduce the frequency of earnings reports to every six months. According to him, this would unlock savings for companies on compliance costs and enable managers to focus more on operations.

And now, it seems quarterly reporting may see a major change.

Earlier this week, it was reported that the SEC is preparing a proposal that would give companies the option to share reports twice a year with investors. The proposal for this rule change could be published as soon as next month and will be subject to a 30-day public comment period. The SEC will then vote on the proposed rule change.

This proposed rule would not eliminate quarterly reports altogether, as it’s only set to make it optional—a practice already observed by European companies and U.K. firms. 

While this proposal could potentially save companies time and money from putting quarterly reports together, it comes with a major caveat.

Earnings releases mark some of the most volatile days for a public company’s stock price, as investors react to new information flows. While less frequent reports could be good for companies, investors would have a harder time evaluating stocks in the long run. 

If companies released earnings reports twice a year, the volatility this would bring would likely be much more extreme. And in today’s AI-driven market—which has drastically shortened the business cycle—investor demand for information is already at a far higher rate.

Based on how much can change for a company today within a six-month period, investors cannot afford to hear from businesses twice a year and be expected to accurately value companies.

While there’s no denying that management teams feel constrained by quarterly reports, eliminating them entirely may not be the optimal solution.

The issue of investor transparency is all the more important today, especially as many investors are worried about private credit, a space that has been criticized for lack of transparency.

Eliminating the quarterly reporting standard may not be the right solution, as the lack of investor transparency and reduced information flow will only worsen stock volatility, increase overvaluations, and aggravate the negative effects of market corrections and stock revaluations when they occur. 

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research