US regulators want to make corporate earnings reports less frequent, but investors have doubts

The U.S. government has pitched an obscure accounting rule change that has ignited a firestorm of opposition. If enacted, its effects might be felt from the capital markets to your retirement savings account.

At issue is a proposal by the Securities and Exchange Commission that would scrap a long-standing requirement for registered companies to disclose their earnings every three months. Instead, they would have the option to do so only every six months.

The agency says its proposal has two goals: One is to reduce a company’s compliance costs needed to prepare financial statements; the other is to promote longer-term planning rather than a short-term fixation on earnings. A final decision is expected by late 2026.

These ideas may sound in the weeds to the average American, but the proposal has prompted opposition that is literally record-breaking ever since it was released for comments in May 2026. To date, over 280,000 letters have come in, with the vast majority against. By comparison, one study that covered 417 different proposals over 30 years tallied more than 65,000 letters total.

I’m an accounting professor who has constructed a tracker that lets people scour the SEC docket and decipher the general sentiment of these comments. I found that the main driver of this hostility is concern that less frequent reporting would make it harder for investors to monitor companies’ performance and decision-making, because key information is withheld for longer periods.

This reduction in transparency carries another risk as well: It would likely make it more expensive for companies to raise capital. Once external monitoring is reduced, investors may demand a higher rate of return because they have less information about the company’s health. That means the company would need to pay more for that uncertainty, whether through selling shares, borrowing from lenders or issuing bonds.

In short, there’s a trade-off between the cost of capital and transparency.

A tsunami of opposition

If a business wants to be a publicly traded company, it has to register with the SEC, which governs and regulates this process. Once registered, the company has to disclose its financial performance every three months, a requirement that has held since 1970.

Whenever the agency issues a new rule, it opens it up to comments first, just like other government agencies do. That feedback is meant to shape the final rule before it becomes codified.

What’s unusual in this case is the overwhelming degree of opposition – more than 99% of all comments, many from retail and individual investors, according to my tracker.

“My husband worked for Enron. We lost most of our retirement savings when their fraudulent activity came to light,” wrote one commenter. “We were still young enough to make some of that income back, but we knew many retirees who ended up working into their 80’s. Quarterly reporting is a gate keeper. Keep it.”

Wrote another: “I rely on quarterly reporting for the same reason your child gets a quarterly report card. … There the metaphor ends, because a good teacher can catch failing performance and course correct with parents long before report cards are issued. Investors do not have that luxury.”

Some point out that the commission’s claim of company savings on compliance costs is overblown. The estimated average savings, according to the proposal, is around US$200,000 a year per firm, which is a drop in the bucket for a typical public corporation.

But more broadly, the comments reveal how much this rule could matter to ordinary investors. Retirement savings, through accounts like 401(k) plans and individual retirement accounts, are directly exposed to company performance, whether or not the fund in question is diversified. That means any reduction in financial transparency has direct implications on how the investments of the funds are monitored.

That risk was laid out in a letter from the Securities Industry and Financial Markets Association, or SIFMA. The trade group wrote that the estimated net savings “could be offset or outweighed by an increase in the cost of capital as investors demand higher risk premia for less timely information.”

Federated Hermes, an asset manager, also pointed to this scenario: “Issuers that elect semiannual reporting may face signaling risks, as investors could interpret such a choice as reflecting reduced transparency,” the letter said. “This may affect analyst coverage and cost of capital.”

Companies weigh in

As for the companies themselves, it’s too early to say whether they would take advantage of the six-month option. But several have said they would choose to report less frequently.

Drugmaker Eli Lilly is one example, making clear its preference in its official comment, while letters from Financial Executives International, an industry lobby, stated that 58% of the member companies it surveyed suggested they would change.

For its part, the commission is still evaluating all the feedback before its leadership takes a vote. Traditionally, it’s led by five commissioners, with three representing the party in power and two from the opposition. However, in this case, the two Democratic seats in the minority are currently vacant, and one Republican seat is about to be vacated.

With so few votes on hand, the commission may in fact change its rules so that this proposal could clear with support from only two commissioners. On Sept. 30, 2026, it suggested a rule change so that the two votes would suffice.

For now, SEC Chair Paul Atkins seems undeterred and has stated that the commission is moving ahead.

How many companies will make the move given the concerns laid out in the comments, however, remains an open question.

As the SEC’s own Investor Advisory Committee, an independent body, put it: “The evidence does not support the view that short-termism is a major problem for U.S. public companies today, nor is there strong evidence to support the view that costs for public companies would be significantly reduced.”