By Jonathan Weil

The government appears determined to press forward with its plan to let public companies opt out of quarterly financial reporting. Now companies and their boards must decide whether they want to and what it might cost them.

U.S. securities regulation is a disclosure-based system. Reducing the frequency of required financial reports strikes at the heart of its design. This explains the outcry over the Securities and Exchange Commission's proposal to make quarterly reporting voluntary and allow semiannual reporting instead. Many investors see it as an act of contempt for their interests.

Vociferous complaining won't help maximize returns, though. Investors must operate within the world they have, not the one they wish existed. Barring an unexpected pivot by the SEC, practical considerations are fast approaching for investors and companies alike.

Corporate boards that switch to semiannual reporting risk branding themselves as laggards in the eyes of the market. Less transparency often translates into lower equity valuations and higher borrowing costs. Moreover, the SEC could easily reverse the policy after President Trump leaves office. So whatever benefits companies might see in changing practices could be short-lived.

The people who stand to benefit most from less timely reporting include pump-and-dump artists and quick-buck penny-stock promoters. Less disclosure makes it easier to separate easy marks from their money.

But there might be a silver lining: Giving companies the choice of a longer reporting window could make it easier for investors to spot stocks they should avoid.

Reputable companies will continue filing quarterly financial reports anyway. Companies that don't would raise a red flag, leaving investors wondering what they have against keeping the market fully informed throughout the year.

Cutting back to semiannual reporting doesn't necessarily mean ending quarterly disclosures. ExxonMobil, which submitted a comment letter in support of the SEC's proposal, said it expects to keep issuing quarterly earnings releases if it makes the switch.

These lack the completeness and precision of full financial reports, and the standards for them are lower. But they may suffice for many investors.

The buffet of options could set up an interesting market experiment. Most large companies are expected to continue with quarterly reporting while some companies won't, leading to differences within individual sectors. This would make it possible to study whether those that report less frequently indeed trade for a discount or have a higher cost of capital as a result.

The SEC began requiring quarterly financial reporting in 1970, and investors have long taken it for granted. In many ways it is designed for times of stress, not periods of calm. And while the reports are often voluminous, it is hard to predict what seemingly obscure data points could become essential in a moment.

After Silicon Valley Bank failed in March 2023, not long before first-quarter earnings season began, investors were suddenly clamoring for timely information about the stickiness of lenders' deposits and the market values of their bondholdings. It would have been inconceivable to make investors wait an extra three months for complete sets of financial statements.

Then again, it would be largely futile for publicly held banks to stop filing quarterly reports with the SEC. They also file quarterly financial reports with banking regulators that contain much of the same information.

The SEC had posted about 221,000 comment letters about its proposal as of Thursday, with more awaiting processing. A tracker created by Tzachi Zach, an accounting professor at Ohio State University, at last count showed 99.5% of the letters opposed it.

It was Trump who asked the SEC to begin the process of making quarterly reporting voluntary. Its initiative was always aimed at pleasing an audience of one.

These are heady times for the capital markets. Major U.S. stock indexes are near all-time highs. Valuations are rich. Leveraged bets are soaring. New technologies are booming. It's a risk-on environment in the extreme, and an ideal moment for opportunists looking to slash investor protections.

But changing the rules to make quarterly reporting optional is an overreach. Companies and their boards must decide if they will be the ones to prove it.

Write to Jonathan Weil at jonathan.weil@wsj.com

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July 26, 2026 05:30 ET (09:30 GMT)