The U.S. Securities and Exchange Commission (SEC) proposed a major change in the reporting frequency of public companies on Tuesday.
The SEC’s proposal puts an end to a 55-year-old mandatory requirement for U.S. public companies to share detailed financial results four times a year. Instead, companies could opt to file semiannual reports on a new Form 10-S, replacing the current quarterly reports on Form 10-Q.
If adopted, this change in reporting frequency would result in companies filing one semiannual report and one annual report each fiscal year, as opposed to three quarterly reports and one annual report. The amendments would let public companies choose a reporting frequency that suits them and their investors.
A public comment period is open for 60 days following the date of publication, which was May 5.
SEC Chair Paul Atkins said that the “rigidity of the SEC’s rules” has prevented firms and investors from setting reporting timelines that best fit their needs.
Wall Street Divided Over Bi-Annual Reporting
This proposal for optional quarterly reporting has drawn mixed reactions from Wall Street. Last month, Sam Rines, a macro strategist at WisdomTree Asset Management, warned that companies planning to switch to biannual reporting could face selling pressure and valuation cuts from active investment managers. Rines emphasized the need for more information, not less, from companies.
At the same time, Citadel founder Ken Griffin told the Wall Street Journal in September that ending quarterly earnings requirements doesn’t make sense, noting that most businesses already track monthly financials and that longer reporting gaps could reduce transparency and accountability.
On the other hand, CNBC host Jim Cramer had said that it is “brutal” to judge company CEOs four times a year due to quarterly reporting.
While broadly supporting the bi-annual reporting proposal, JPMorgan Chase (NYSE:JPM) Chief Financial Officer Jeremy Barnum previously stated that the company would still provide quarterly guidance through calls with analysts and investors.
Notably, the UK, the European Union, Australia, Hong Kong, Japan and Singapore do not have mandatory quarterly reporting requirements.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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