End Quarterly Earnings Reports? Here's the Debate — Bloomberg | SEC Proposes Amendments to Permit Optional Semiannual Reporting — SEC Press Release | Petition for Rulemaking to Amend Quarterly Reporting Requirements — LTSE (Sept 30, 2025)

It's Thursday, October first. I've been working in and around public markets for most of my career, and I don't think I've ever stopped to ask where quarterly earnings reports came from. Every 90 days, thousands of companies close their books, file the 10-Q, hold a call, release guidance. Analysts build models. Stocks move. CEOs complain about it. The rhythm is so baked into how American capitalism works that it feels like it must be ancient. Like quarterly reporting is just the natural interval at which a business should be measured.

It's not. It was a regulatory decision made in 1970. And five months ago, the SEC formally proposed ending it.

That proposal hasn't gotten much attention outside the financial press, but if it goes through, it would unwind the single most influential reporting standard in the history of American markets. The reason it's happening now has less to do with corporate burden than with a body of evidence that has been accumulating for years suggesting quarterly reporting doesn't just not help long-term performance. It actively damages it.

Before 1934, publicly traded companies in the US had no federal obligation to report their financials at all. The Securities Exchange Act, passed during the Great Depression, created the Securities and Exchange Commission and gave it the power to require periodic reporting, but it didn't specify how often. The SEC didn't set a formal schedule for another twenty-one years.

In 1955, it settled on semiannual. Twice a year. That was the standard for the next fifteen years.

Then, on its own, the SEC shifted to mandatory quarterly reporting in 1970. There was no crisis that prompted it. No scandal. It wasn't a response to investor demand. The Commission simply decided that semiannual wasn't granular enough and moved the entire US public market to a 90-day cycle. The 10-Q was born. The Dow was at 800.

That single administrative decision created the quarterly earnings season we all know. The four-times-a-year corporate ritual. The analyst calls. The guidance updates. The obsession with beats and misses. The entire infrastructure of sell-side research that revolves around a three-month window. None of it emerged from market forces. One filing schedule set the fundamental tempo of American capitalism.

What makes this interesting is that the rest of the world didn't follow.

The European Union, through its Transparency Directive, requires listed companies to publish semiannual reports. Twice a year is the baseline. Individual countries can require more, but the EU minimum is semiannual. Quarterly reporting in Europe is voluntary.

The United Kingdom actually moved to mandatory quarterly reporting in 2007, then removed the requirement in 2014. Seven years. That's all the experiment lasted. In November 2014, the UK's Financial Conduct Authority announced it was scrapping the obligation for listed companies to publish interim management statements every quarter. Companies could still report quarterly if they wanted to. Most didn't.

A 2017 study by Robert Pozen at Harvard's Kennedy School looked at what actually happened when the UK dropped quarterly reporting. The headline finding: it had no material impact on corporate investment levels. Companies didn't suddenly start investing more in R&D or capital projects when freed from the 90-day cycle. But it also didn't hurt. The thing everyone predicted would happen, either way, basically didn't.

What did change was analyst behavior. Mandatory quarterly reporting was associated with more sell-side coverage and more accurate consensus earnings forecasts. Removing it reduced coverage somewhat and made forecasts slightly less precise. That's the trade: you gain better short-term predictions at the cost of forcing every public company CEO in the country to manage to a 12-week clock.

The argument for killing quarterly reporting is not really about the UK experiment. It's about what researchers started finding when they looked at the behavioral effects of forcing companies to operate in 90-day increments.

McKinsey Global Institute built something called the Corporate Horizon Index. They classified companies as long-term or short-term based on five indicators: investment levels, earnings quality, margin growth, quarterly management intensity, and earnings-per-share growth relative to accruals. Then they tracked performance from 2001 to 2014. A 14-year window.

The long-term companies outpaced the short-term companies on basically every metric. Revenue grew 47 percent more, cumulatively. Earnings grew 36 percent more. Economic profit, which accounts for the cost of capital so it measures actual value creation, not just accounting profit, grew 81 percent more. Long-term firms added nearly 12,000 more jobs on average. McKinsey estimated that if every US firm had created jobs at the rate long-term firms did, the economy would have added more than five million additional jobs.

Long-term companies also spent almost 50 percent more on R&D by the end of the period and kept spending through the 2008 financial crisis while short-term firms cut back. Their market caps grew by $7 billion more on average. They had a 50 percent greater likelihood of landing in the top quartile or top decile for total shareholder return.

But the most striking number in McKinsey's work came from their survey of more than 1,000 board members and C-suite executives. 87 percent said they felt the most pressure to perform within two years or less. And 55 percent of executives at companies without a strong long-term culture said their company would delay a new project to hit quarterly targets, even if it sacrificed value.

More than half of senior executives at short-term-oriented firms would knowingly destroy value rather than miss a quarter. These are not bad people. They are rational actors operating inside an incentive structure that rewards them every 90 days and punishes any shortfall immediately.

On May 5 of this year, the SEC under Chairman Paul Atkins formally proposed allowing companies to switch to semiannual reporting. The proposal keeps the 10-K for annual reporting. It preserves 8-K filings for material events so investors still get real-time disclosure of anything significant. Companies could stay quarterly if they want. Nobody would be forced to move. Atkins framed it as an effort to reduce the burdens of being public and, in his words, "make IPOs great again." The Long-Term Stock Exchange, a San Francisco-based national exchange known by its ticker LTSE, had petitioned the SEC for exactly this change in September 2025.

The public comment period closed over the summer. If the rule is adopted, US public companies would have, for the first time since 1970, the option to stop reporting every 90 days.

The thing I keep coming back to is that 55 percent number: executives who would delay a value-creating project to hit the quarter. That's not a corporate governance problem. It's a structural one. You can't fix it with better leadership. You can only fix it by changing the clock. The UK found that removing quarterly reporting had no negative impact on investment and only a modest effect on analyst coverage. And the long-term companies in McKinsey's study, the ones that ignored the quarterly noise, dramatically outperformed everyone else. If the rule passes, the question is less about whether companies will be better off and more about whether fifty years of habit is stronger than the evidence against it.

Stay informed, stay curious, and we'll see you tomorrow.