Statement Summary
The SEC is proposing changes to the mandatory quarterly reporting requirements established nearly 75 years ago, advocating for more flexibility in reporting periods for public companies. The new framework would allow companies the option to file semiannual reports instead of quarterly, recognizing the diverse financial rhythms of different businesses. This shift aims to reduce the short-term focus encouraged by quarterly reporting, allowing management to concentrate on long-term strategies.
The proposal facilitates a reporting system tailored to various business models, empowering companies and investors to choose their optimal reporting cadence. Stakeholders are invited to share their insights on these changes, which aim to enhance flexibility and reduce compliance burdens in the financial reporting landscape.
Original Statement
Quarterly reporting has its roots in post-World War II industrial recovery. But is there any particular magic to quarterly reporting? Why not monthly? Or weekly? Or real-time reporting? Modern technology makes faster and more frequent reporting possible, but that does not necessarily mean it is better. On the other hand, should the Commission continue to mandate a quarterly reporting cycle at all? If investors are unsatisfied with the cycle of corporate financial reporting, they will attach higher risk to that company and raise the cost of capital.
Today, the Commission proposes changes to our reporting framework to give companies more options in fulfilling their reporting obligations. A framework built nearly 75 years ago, when public companies tended to be in manufacturing and the roles of institutional investors and asset managers in the markets were different, should not be presumed to serve all companies optimally in 2026.
This proposal would permit companies that go—and remain—public to be subject to a more flexible SEC reporting framework. Specifically, the Commission proposes to allow companies to meet their Exchange Act interim reporting obligations by filing semiannual reports on new Form 10-S, rather than quarterly reports on Form 10-Q. The Commission is also proposing corresponding amendments to Regulation S-X to facilitate this change.
Our proposal focuses on flexibility—ensuring companies and their investors can select reporting cadences that best reflect their business models. An established pharmaceutical company with a trillion-dollar market capitalization is markedly different from a pre-revenue biotech company pursuing approval of a single drug candidate. Their financial rhythms, business milestones, and investor expectations might differ dramatically. For the former, quarterly financial developments may signal underlying business changes, whereas for the latter, the key information may relate to the successful scientific development and FDA approval of the drug.
Our framework should allow market participants to select the optimal reporting period for their business. Issuers will select a reporting period, and investors and market intermediaries will signal whether such period aligns with their expectations—through their decision to buy or sell such securities. Companies are free to communicate important information through means other than the Form 10-Q, including press releases, blog posts, and social media. Further, companies remain subject to current report filing obligations on Form 8-K for certain material events. These events include, among others, entries into material definitive agreements, notices of delisting, unregistered sales of equity securities, and Regulation FD disclosures.
Moreover, concerns have been raised that the Commission’s mandatory quarterly reporting scheme results in a greater emphasis on the short-term outlook. Nearly three decades ago, Chairman Arthur Levitt emphasized the need to look beyond short-term estimates, stating
“Wall Street needs to focus less on quarterly earnings and more on the long-term health and viability of a company.”
Excessive focus on quarterly results can distract management from executing long-term strategy. It can also impose compliance burdens that may not produce commensurate benefits for investors. To the extent that the Commission can reduce the amount of time spent managing regulatory obligations that do not add clear corresponding value to capital markets, we should rethink such obligations.
I look forward to hearing the views of commenters as to whether the proposed approach would promote such an outlook, reduce compliance costs, and increase flexibility. I greatly appreciate the efforts of the staff of the Divisions of Corporation Finance and Economic Risk and Analysis as well as the Offices of the General Counsel and the Chief Accountant for their work on this proposal. I also appreciate the efforts of President Trump to improve the productivity and efficiency of American companies by reducing unnecessary regulatory burdens.
