The question of whether quarterly earnings reporting promotes or harms long-term value creation has returned to the US policy agenda. As a former fund manager, I can appreciate the appeal, but as someone who currently spends her days analyzing investor decision-making data, I see the implications of a shift to semi-annual reporting as much broader than the familiar short-term argument suggests. Reducing the frequency of earnings releases would amount to a major behavioral intervention in the way market practitioners learn, recalibrate and compete.
While proponents argue that quarterly disclosure causes both companies and investors to fixate on short-term results (McKinsey study links short-term focus to lower ROIC[1]), the market implications for investment professionals are more complex and subtle than this suggests – with different implications for different parties.
From a big picture perspective, moving to a semi-annual earnings cycle would likely slow the feedback loop, increase dispersion in the quality of investment decisions, shift the information advantage, and increase uncertainty for quantitative models and benchmarks.
Having been a portfolio manager in Britain when companies only reported twice a year, I remember how much more fun fundamental investing was under that structure. We were really thinking longer term, and the administrative burden was lighter for everyone involved, so I can appreciate the argument for making the change.
However, as someone who now spends her days distilling useful insights from data, I believe that eliminating quarterly earnings would reduce transparency in a way the industry cannot afford. Despite all its shortcomings, quarterly reporting remains one of the few structured feedback mechanisms available to public investors. It anchors accountability and gives practitioners regular opportunities to recalibrate expectations, test hypotheses, and revise assumptions.
Eliminating that rhythm would lengthen the feedback cycle and weaken the industry’s collective learning mechanism. Essentia data shows that the quality of decision-making improves most when feedback is timely, structured and specific, exactly the quality that quarterly reporting delivers.
Winners, losers and unintended consequences
Moving from quarterly to semi-annual earnings reporting would be an important behavioral intervention designed to reduce short-termism, but which will certainly have a series of intended and unintended consequences.
For regulators like the SEC, the Fed, and other systemic risk regulators, eliminating quarterly earnings would mean a 50% reduction in a data source they rely on heavily. Less frequent company information would slow the feedback loop and delay the detection of emerging risks, a worrying dynamic in an era of index funds, algorithmic trading and rapid capital movements.
Perhaps the biggest winner from an increase in earnings report frequency would be the fundamental active fund management industry.
It’s also hard to imagine company management anything but happy about the prospect of less frequent public reporting. It would feel like a windfall for decision makers who want more room to focus on long-term strategy rather than managing the share price every quarter. It could even help revive the ailing IPO market, where the reporting burden associated with quarterly earnings remains a meaningful deterrent to going public.
Proponents of corporate governance would argue (and I would agree) that reduced transparency increases the risk that poor management or even crimes will go undetected. That said, with the infrastructure already in place for internal quarterly reporting, there is little reason to think that well-intentioned management teams would neglect governance; they simply wouldn’t have the burden of publicly reporting this every three months.
Quantitative and systematic strategies that rely on a continuous stream of reported fundamental data to recalibrate factor exposures, predict risk, and validate machine learning inputs would face clear challenges. That said, many are likely already running scenarios and adjusting their factor construction and risk monitoring practices in anticipation of such a shift.
Perhaps the biggest winner from an increase in earnings report frequency would be the fundamental active fund management industry. Less frequent public information means more room for generating alpha: more room for expertise to make a difference, whether that expertise comes in the form of a human, a computer or, increasingly, a combination of both. This is an environment where fundamental analysts and PMs must adapt their research cycles and model inputs to a longer timeline, prioritizing proprietary research.
Quantitative and systematic strategies that rely on a continuous stream of reported fundamental data to recalibrate factor exposures, predict risk, and validate machine learning inputs would face clear challenges. That said, many are likely already running scenarios and adjusting their factor construction and risk monitoring practices in anticipation of such a shift.
Anyone whose product relies on frequent disclosures to evaluate governance, compensation alignment and ESG progress is likely to suffer.
Alternative data providers would likely see an acceleration in demand as companies reallocate the time and resources currently spent on revenue processing into data that can illuminate the gaps created by less frequent disclosure. In contrast, providers whose products rely on regular filings to evaluate governance, compensation alignment and ESG progress would face clear challenges.
It is less clear whether the sell side would be a net winner or loser. Much of the stock research, sales, and corporate brokerage activity is anchored around earnings season, and without that event, trading catalysts would diminish. Halving the frequency of formal results would mean fewer opportunities to publish notes, have conversations, and get customers’ attention.
The financial media would also lose a key driver of readership and engagement. A slower cadence would shift the narrative power from reported data to speculation, potentially reducing accountability for both journalists and analysts.
Could fewer public earnings calls help preserve the role of equity research analysts? The threat of AI to junior analysts remains, but the expertise within the seasoned sell-side community could become more valuable. Knowing what questions to ask and what data to analyze between formal earnings announcements is a must for an experienced analyst, and a slower cadence could reinforce the importance of those skills.
In a similar vein, less frequent and standardized disclosures would create challenges for the passive investment ecosystem, which relies on regular, standardized reporting to maintain index accuracy and benchmark integrity. Allocators and institutional managers using these products would be exposed to greater risk in terms of index composition and weighting, especially in volatile markets, increasing the potential for tracking error.
Reduced transparency would make passive investing riskier, weakening one of its core value propositions.
Ultimately, the debate over quarterly versus semi-annual reporting is not just about frequency of disclosure, but also about feedback loops, incentives and behavior. Slowing down that rhythm can trade some transparency for depth. The clear takeaway for the practice is this: Regardless of reporting frequency, success will depend on disciplined investment decisions, effective process monitoring and the ability to use alternative data and feedback sources to fill information gaps.
[1] McKinsey & Company and FCLTGlobal, Corporate Long-Term Behaviors: How CEOs and Boards of Directors Drive Sustainable Value Creation (October 2020), p. 36.
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