The cadence of public company financial reporting has been in the news in recent weeks, as President Donald Trump and Securities and Exchange Commission Chair Paul Atkins both raised the prospect of changing the regulatory scheme from quarterly to semiannual reporting. The current system, which has been in place since 1970, requires companies to file one Annual Report on Form 10-K and three Quarterly Reports on Form 10-Q throughout the year. With a switch to semiannual reporting, public companies would only be required to file two reports per year, each covering a six-month period.
At first glance, this potential change seems purely positive for public companies: a company can spend more time running its business than reporting on running its business. As with any major change, however, there are nuances, practical benefits, and potential drawbacks to consider.
Benefits to Semiannual Reporting
- Potentially reduce compliance costs. Managing public financial reporting twice a year instead of four times a year could save companies time and money on compliance costs. Particularly for reporting companies with fewer financial resources, this savings could be game-changing.
- Incentivize long-term decision-making. Public companies that report twice a year may have more incentive to focus on the company’s long-term future. Instead of managing costs to a quarterly forecast, companies could have more flexibility to deploy financial resources during a semiannual period. Companies could focus on longer-term goals.
- Create consistency with foreign jurisdictions. Public companies listed on exchanges in the European Union and the London Stock Exchange in the United Kingdom are only required to report semiannually; this change in the United States would align reporting requirements for U.S. public companies and their European and U.K. peers.
Potential Drawbacks of Semiannual Reporting
- Less required transparency for investors and possible information asymmetry. Less frequent required updates from public companies could create more uncertainty for investors and in the market. Investors could face challenges pricing in the risk of investing in a public company. Analysts may lack the information needed to update earnings models, and what would have been a small earnings miss versus expectations in one quarter could result in a large miss for a semiannual period, which could result in increased stock price volatility.
- Potential for more frequent, less structured updates. Although quarterly reporting would not be required, some public companies may choose to update the market on that familiar cadence to help manage market expectations, investor relations inquiries, and potential Regulation FD issues, similar to how certain companies listed in the U.K. or Europe still report quarterly without a regulatory requirement. In the absence of a quarterly reporting requirement from the SEC, private ordering could fill the void, which may increase compliance costs in the short term as markets, companies and their compliance professionals adjust to the change.
- Longer blackout windows. Public company insiders currently face closed trading windows covering the majority of the year, limiting when officers, directors, and other insiders can buy or sell shares. These windows typically open after a public company files its annual or quarterly report and shares all ripe material nonpublic information with the public. Without quarterly reports, public companies may have to create opportunities to share material nonpublic information with the market to open trading windows for insiders.
- Limited benefit for companies raising capital. For any public company seeking to raise capital in the public markets, it must ensure all material nonpublic information has been shared with potential investors before it completes a securities offering.
Next Steps
The SEC is not expected to issue a formal rule proposal on semiannual reporting until Spring 2026, the timing of which could be impacted by the current lapse in appropriations for the federal government. Typically, amendments to the SEC’s rules require a months-long public comment period, so public companies should not expect a change in this area until mid to late 2026 at the earliest. If you have any questions about how this change might affect your company, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets practice group.