Keep Quarterly Reporting

I wrote Paul S. Atkins, chairman of the U.S. Securities and Exchange Commission (SEC) to oppose making quarterly earnings reporting optional.

The idea is being framed as modernization. It is not. It would weaken market discipline at a time when transparency and trust matter more than ever.

On March 16^th The Wall Street Journal reported that regulators are weighing this shift.

The rationale is familiar: reduce burden, promote long-term thinking, ease pressure on management. It sounds reasonable. It doesn’t hold.

Consequences are clear … and they run in the wrong direction.

Reducing reporting frequency would weaken market discipline.

Quarterly reporting imposes a fixed cadence of accountability. Every three months, companies must explain results, reconcile expectations and signal direction. That cycle limits drift and keeps performance tied to evidence.

Move to six months … and the discipline weakens immediately. Underperformance has more time to sit, grow and compound before investors can assess it. Markets depend on frequent feedback. Reduce it, and you reduce accountability.

Less frequent disclosure would widen information gaps.

Markets do not wait for filings. When standardized disclosure recedes, price discovery shifts into private channels, alternative data and selective access. Large institutions adapt quickly. They have the resources to reconstruct what public reporting once provided. Smaller investors do not.

They are left with less verified information and more noise. That shift is not neutral. Less disclosure doesn’t level the field. It tilts it. It redistributes advantage toward scale and access.

Reduced reporting frequency risks raising the cost of capital.

Investors price risk based on visibility and verification. When data becomes less frequent, uncertainty rises. Analytical models weaken. Forecasts rely more on assumption and less on reported results.

Research has consistently shown that greater disclosure reduces information risk and supports lower capital costs. The inverse also holds. Reduce visibility, and investors demand higher returns.

That pressure flows through valuations and into financing costs. What is framed as efficiency becomes a more expensive capital environment.

Transparency would deteriorate.

Longer intervals between audited, comparable disclosures reduce oversight and weaken governance pressure. They create more room to defer recognition of adverse developments and smooth results across periods.

These effects are gradual but cumulative. They follow from incentives, not intent. As Louis Brandeis observed, “Sunlight is said to be the best of disinfectants.” Less frequent sunlight reduces accountability.

Market structure considerations also matter.

Passive investing now represents a substantial share of U.S. equity ownership. Indices, ETFs, and systematic strategies depend on timely financial data to assess exposures and rebalance.

Expand the gap between verified disclosures, and these systems rely more heavily on estimates. Mispricing risk increases. Tracking error widens. At scale, these are not marginal distortions. They are system-level pressures.

The argument for change often invokes long-termism. But short-term behavior is driven by incentives—compensation, governance, and market expectations—not by reporting frequency.

Reducing disclosure does not change those incentives. It reduces visibility into them. There is little evidence that less frequent reporting produces better long-term decisions. There is strong evidence that it produces less informed markets.

There is also a competitiveness argument – that U.S. companies are disadvantaged by more frequent reporting than global peers.

The opposite is closer to the truth. U.S. markets attract capital because they are more transparent and more reliable. Disclosure is not a drag on competitiveness. It is a source of it.

None of this argues against reform. Reporting can be burdensome. Some disclosures are redundant. Technology can streamline preparation and improve accuracy. Requirements can be simplified and focused on what matters.

But cadence is not the problem.

Quarterly reporting should remain the baseline. It supports price discovery, reinforces accountability and sustains investor confidence. Weaken it, and the effects will be clear: wider information gaps, higher capital costs and reduced trust.

Markets run on confidence. Confidence runs on information. Reduce the flow of reliable information, and the system does not become more efficient.

It becomes more fragile. Withholding information is not efficiency. It is opacity.

As Warren Buffett has noted, “The rearview mirror is always clearer than the windshield”—less frequent reporting makes investors more reliant on what has already happened and less able to see what is coming.

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Richard Torrenzano is chief executive of The Torrenzano Group. For nearly a decade, he was a member of the New York Stock Exchange management (policy) and executive (operations) committees. His new book, Command the Conversation: Next Level Communications Techniques will be launched in late January. He is a sought-after expert and leading commentator on artificial intelligence, cyber and digital attacks; financial markets; brands, crisis, media and reputation.