Frequency of financial reporting: developments in the US and lessons from the European perspective

The U.S. Securities and Exchange Commission (SEC) recently proposed a major regulatory change that would allow publicly listed companies in the US to switch from quarterly to twice-annual earnings reports. What are the implications of the proposed changes and what can we learn from the European experience? Andrei FILIP, professor of financial reporting at IÉSEG, shares his reflections – drawing on a study he co-authored, which analyzed and compared the frequency of financial reporting obligations in 49 countries and how this impacts the quality of the forecasts made by financial analysts.

Date

07/02/2026

Temps de lecture

5 min

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Could you briefly summarize current (financial reporting) discussions taking place in the US that would change a long-standing requirement for listed companies in the US to report 4 times a year?

Andrei FILIP: The discussion in the U.S. reflects a broader debate that has been taking place internationally for more than a decade: whether mandatory quarterly reporting creates sufficient informational benefits to justify its costs.

Under the current SEC rules, U.S. listed companies generally file three quarterly reports (Form 10-Q) and one annual report (Form 10-K). The SEC has now proposed allowing companies to elect a semiannual reporting regime instead, through a new Form 10-S, while preserving quarterly reporting as an option.

The Commission argues that this additional flexibility could reduce compliance costs, allow management to devote more time to long-term strategy and innovation, and potentially encourage more firms to remain listed or go public. At the same time, the proposal explicitly recognizes that many firms may continue to report quarterly because of investor expectations, analyst demand, contractual obligations, or industry practice.

The current SEC proposal is part of a much longer policy debate over the costs and benefits of mandatory quarterly reporting, that has come to the forefront once again during the current US administration.

Supporters argue that this latest reform proposal would reduce compliance costs and encourage a greater focus on long-term value creation, whereas opponents emphasize the importance of timely financial information for investors, market efficiency, and corporate transparency.

The proposal also draws on international developments, noting that several major jurisdictions—including the European Union, the United Kingdom, and more recently Japan—have moved away from mandatory quarterly reporting or adopted more flexible reporting frameworks.

Supporters of the SEC proposal argue that less frequent financial reporting would reduce short-termism and compliance costs. Does your research support this view?

A.F: Our research speaks directly to one important aspect of this debate. Rather than focusing on compliance costs or managerial behaviour, we examine how reporting frequency affects the information environment for one of the capital market’s key intermediaries – financial analysts.

Using data from 49 countries, we find that mandatory quarterly reporting is associated with more accurate annual earnings forecasts, lower forecast dispersion, and more informative stock recommendations. We also show that these benefits are particularly pronounced where information acquisition is more costly or where institutional environments provide less support for information production.

In other words, more frequent mandatory reporting appears to improve the quality of information available to market participants, especially when alternative information sources are weaker.

Therefore, while the SEC proposal emphasizes the potential benefits of greater flexibility and reduced reporting costs, our evidence highlights that reducing reporting frequency may also involve informational trade-offs. The policy discussion is ultimately about balancing these competing objectives: lowering compliance burdens and encouraging long-term decision-making on the one hand, while preserving the transparency and information quality that support well-functioning capital markets on the other.

While concerns about short-termism are frequently cited as a rationale for reducing reporting frequency, the empirical evidence remains far from conclusive. Our research instead shows that quarterly reporting generates tangible informational benefits by improving analysts’ forecast accuracy and reducing information asymmetries. From this perspective, reducing the frequency of mandatory reporting risks weakening market transparency without clear evidence that it would encourage better long-term corporate decision-making.

Has Europe already gone through a similar debate, and what can policymakers in the United States learn from the European experience?

A.F: Europe does not have a single reporting model. Before 2013, the EU Transparency Directive required listed companies to publish annual and half-yearly financial reports, together with Interim Management Statements (IMS). Unlike U.S. quarterly reports, however, IMS were relatively brief narrative updates on material events and business developments rather than full sets of interim financial statements.

IMS could range from a few sentences to a few pages, and they could contain qualitative, quantitative, or both types of information. The 2013 revision of the Transparency Directive abolished the mandatory IMS requirement. Importantly, the Directive did not ban quarterly reporting. Instead, it gave Member States and stock exchanges the flexibility to determine whether more frequent reporting should be required or left to market practice.

As a result, Europe exhibits a wide variety of reporting regimes. Countries such as Finland, require mandatory quarterly reporting for all listed firms. A second group, including Germany, Sweden and Denmark, requires or strongly encourages quarterly reporting for certain categories of listed companies, typically through stock exchange listing rules. A third group, including France, Italy, and Spain, relies primarily on semiannual reporting as the legal baseline, with any additional quarterly disclosure generally provided on a voluntary basis.

Rather than converging on a single model, Europe has evolved towards a flexible system in which reporting frequency varies across jurisdictions and firms.

At the same time, our research suggests that any move towards less frequent reporting should be approached with caution because the informational benefits of quarterly reporting are not uniform across firms and countries.

While we document an overall improvement in analysts’ forecast accuracy, the benefits are concentrated in settings where information is relatively scarce or costly to obtain. At the firm level, quarterly reporting is particularly valuable for smaller firms, firms followed by fewer analysts, and firms characterized by greater uncertainty and higher forecast dispersion.

At the analyst level, it is especially beneficial for less experienced analysts and those working in smaller brokerage houses with more limited information resources. At the country level, the gains are strongest in jurisdictions with weaker corporate governance, lower disclosure quality, and less effective legal institutions, where mandatory quarterly reporting acts as a substitute for weaker information environments.

 These findings suggest that the costs and benefits of reducing reporting frequency are unlikely to be uniform. Firms operating in rich information environments may experience relatively small informational losses, whereas firms and markets facing greater information frictions stand to lose the most from a reduction in mandatory reporting frequency.

If the SEC proposal is adopted, what would it mean for companies in Europe, and who stands to gain – or lose – the most from less frequent financial reporting?

A.F: The SEC proposal is unlikely to change the legal reporting obligations of companies listed only in France or elsewhere in Europe. However, it could have important implications for European companies that are also listed in the United States.

These cross-listed firms currently comply with SEC reporting requirements and, if the proposal is adopted, could elect to move from quarterly to semiannual reporting. This may reduce their reporting burden and allow them to better align their U.S. reporting with European practice. More broadly, the proposal could influence global reporting norms by encouraging firms and regulators to reconsider the costs and benefits of reporting frequency.

Category (ies)

Economics & Finance

Tags

europefinancial analystfinancial reportingusa

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