Professional investors are pushing back against a proposal by Wall Street's top regulator to reduce the frequency of financial reporting for U.S. public companies, according to a new industry survey. The survey, conducted by the CFA Institute, found that nearly two-thirds of investment analysts and portfolio managers believe the U.S. Securities and Exchange Commission (SEC) should maintain mandatory quarterly financial reporting instead of switching to a twice-yearly schedule.
Survey Highlights Strong Investor Preference for Quarterly Reports
The CFA Institute survey, released Wednesday, polled over 2,500 respondents from a pool of more than 48,000 CFA charterholders. Results showed that 63% of respondents opposed the SEC's plan to allow companies to file financial reports semi-annually. "Investors globally — not just in the U.S. — continue to view quarterly reporting as an essential feature of transparent, efficient, and trustworthy capital markets," said Matthew Winters, a senior director at the CFA Institute, in a statement.
SEC Proposal and Its Origins
The SEC released its much-watched proposal in May, which would permit public companies to replace quarterly reports with semi-annual filings. Companies would still be allowed to hold quarterly earnings calls and provide guidance. The plan was prompted by U.S. President Donald Trump, who argued in September that a six-month reporting schedule would save companies money and allow managers to focus on long-term business operations. Trump had floated a similar idea during his first term, and the SEC explored it in 2018 but ultimately did not act.
Arguments For and Against the Change
Proponents of the plan, including Nasdaq Inc., claim that less frequent reporting could save businesses time and money, enabling executives and boards to concentrate on long-term results rather than short-term quarterly targets. However, critics warn that reducing reporting frequency could allow companies to hide bad news and increase the risk of insider trading. Public companies have been required to publish formal quarterly financial statements since 1970.
Industry Reactions and Broader Implications
The CFA Institute emphasized the importance of consistent financial reporting: "Complete, accurate, timely, and comparable financial information is the lifeblood of capital markets and investing. A consistent reporting framework strengthens investor confidence, supports market development, and lowers the cost of capital." Other groups, such as the Committee on Capital Markets Regulation, have also urged the SEC to retain quarterly reporting requirements. That committee includes members from JPMorgan Chase & Co., Fidelity Investments, and Robinhood Markets Inc., as well as a representative from Bloomberg LP, the parent company of Bloomberg News. An SEC spokesperson declined to comment on the survey results.
