SEC Proposal to Allow Semiannual Earnings: Advisors Weigh In

The Securities and Exchange Commission has proposed an optional rule that would let U.S. public companies file earnings reports twice a year instead of four times. The agency is accepting public comments on the proposal through July 6. Companies would be able to choose whether to remain on a quarterly schedule or switch to semiannual reporting.

The SEC’s economic analysis says less frequent reporting could reduce incentives for managers to concentrate on short-term results. The analysis also notes other factors, including executive compensation and investor guidance, could influence short-term behavior more than the reporting cycle. Firms that opt for semiannual reports would still need to disclose material events on Form 8-K.

Some corporate advisers and lawyers expressed concerns that a semiannual cadence could allow firms to postpone disclosure of disappointing results. Barry Fischer, a partner at Thompson Coburn who advises public and private companies, warned that investors might interpret an election to report semiannually as a negative signal and that some stocks could face sharp market reactions.

Jeremy Garvey, co-chair of the corporate practice group at Cozen O’Connor, said the overall market effect would depend on how many companies adopt the option. He described a scenario where many firms in a sector shift cadence, noting it would take a large number to create noticeable changes for investors.

Regulatory and market advisers flagged another complication: if companies in the same industry use different reporting schedules, comparing peers could become more difficult. Adrienne Gurley, a partner at Sanders Roberts and a former SEC staffer, noted that inconsistent cadences might affect how the broader market uses financial data for price discovery.

Advisors’ reactions varied by business model. Mitchell Kraus of Capital Intelligence Associates said he is watching the data and how behavior changes if the rule is adopted. Charles Failla of Sovereign Financial Group, who focuses on diversified, low-cost ETFs, said his firm does not rely on individual stock reports and therefore has no strong preference on reporting frequency.

Some financial planners raised practical concerns about client communications. Kashif Ahmed of American Private Wealth said advisors who use quarterly earnings to structure regular client reviews could need to change how they demonstrate value if fewer companies publish quarterly results. He also said companies might face less public scrutiny of quarter-to-quarter performance under a semiannual schedule.

The proposal is optional, so companies would weigh potential investor reactions before opting in. The SEC will review public comments and any final rule would determine how many firms, if any, adopt semiannual reporting and whether the change affects corporate disclosures or investor behavior over time.