Optional Quarterly Reporting Hands Boards a Decision Most Haven’t Framed
On May 5, 2026, the U.S. Securities and Exchange Commission (SEC) proposed a rule that would let public companies replace three quarterly reports with one semiannual report on a new Form 10-S. The SEC release, Semiannual Reporting, makes the change optional. Companies would elect it once a year, and quarterly reporting would remain the default.
Comments closed on July 6. Skadden reports that the agency received more than 200,000 letters, a record, and that most opposed the change. In SEC Semiannual Reporting Proposal Draws a Record 200,000 Comments: What Companies Should Consider Next, the firm adds that the SEC has announced no timetable. SEC Chief Accountant Kurt Hohl said in September that finalizing the rule this year would be aggressive given the comment volume, and that the SEC would probably put out something on the annual filing check box by April or May, though he said many variables could change that. Thomson Reuters reported his remarks in SEC faces delays on semiannual reporting proposal amid record number of comment letters. As of this writing, no final rule exists.
Most finance teams have never chosen a reporting cadence. Quarterly reporting has been required since 1970, so the question never came up. Optional quarterly reporting would raise it every year, and it would reach even the companies that never plan to change a thing.
The proposal alters one rule. The decision it creates runs through a system most boards haven’t mapped.
Three Layers Sit Under Every Quarter
Every quarterly number a public company publishes rests on three layers, and only one of them is a filing rule. The layers are this article’s framing, not a regulatory term, but the SEC release supports each one.
The first layer is the filing. Form 10-Q carries financial statements reviewed by an independent accountant, management’s narrative analysis of results, and certifications from the principal executive and financial officers. Form 10-S would require the same content over 6 months.
The second layer is the market layer, which includes the earnings release, the call, and any guidance. The release notes that these needn’t be reviewed by an accountant or follow U.S. generally accepted accounting principles, and need not include internal control certifications. The proposal changes nothing of substance in the rules for releases or guidance.
The third layer is contractual. Credit agreements, indentures, and covenant tests keep their own calendars. Gibson Dunn explains in its client alert, SEC Proposes Amendments to Permit Optional Semiannual Reporting by Public Companies, that some debt documents demand quarterly statements outright, while others simply point to whatever the borrower files with the SEC. The first kind keeps the quarterly duty alive after an election. The second kind may shift to a semiannual cadence on its own.
What Optional Quarterly Reporting Changes for Companies That Stay Quarterly
Staying quarterly stops being a default and becomes a filing. Under the proposal, a company elects its cadence with a check box on the cover of its Form 10-K, an unchecked box means quarterly, and the choice holds for the full fiscal year. In the SEC’s own example, a company with a December 31 year-end makes its election for fiscal 2027 on the Form 10-K it files in March 2027. Skadden suggests that boards and audit committees begin evaluating now.
Peers set the baseline your investors compare you against. The SEC asked commenters whether investors can fairly compare a quarterly filer with a semiannual filer in the second and fourth quarters, when one company has published fresher data. If several competitors elect semiannual reporting, your analysts may need new ways to read your sector.
The market layer carries more weight in that world. Gibson Dunn reads the release as treating continued quarterly earnings releases as possible, if not likely, for companies that elect semiannual reporting. Those releases would reach investors without accountant review or controls certifications, and the SEC asked whether it should require a review. Hohl made a related point to Thomson Reuters. Audit committees would have to work out their governance approach, including how much auditor involvement to keep and how to get comfortable that nothing significant has changed over a long gap between reports.
Sponsors face a calendar question. A private company going public would make its first election on the cover of its registration statement, and that election decides which interim financial statements the filing must include. Gibson Dunn gives an example. A calendar-year company that elects semiannual reporting could file as late as August 13 without any interim statements, while a quarterly filer would need first quarter statements. Underwriters add a second variable. The release notes that auditors can give underwriters negative assurance in a comfort letter only for periods they have reviewed, and the SEC asked whether semiannual filers would keep paying for quarterly reviews anyway.
What Your Credit Agreement Already Decided
A company that elects semiannual reporting to save money may find that its lenders still expect quarterly statements. Covenants tested each quarter need quarterly numbers whatever the SEC accepts, and the work behind them, including the close, the review, and the compliance certificate, stays on the calendar. Gibson Dunn warns that much of the accounting, audit, and legal cost persists in that case, so a semiannual filing may save less than it appears to. The firm tells companies to read their credit agreements and indentures before electing.
Lenders will also react to the new option in future documents. A borrower that elects semiannual reporting may see new or amended agreements spell out quarterly deliverables in plain terms, turning a cross-reference into a fixed duty. No data yet shows how lenders will behave, so treat that as a reasoned expectation, not a finding.
The Finance Function Needs Redesign, Not Just a New Calendar
A reporting schedule is the visible end of a larger system made of accounting processes, data governance, controls, forecasting, technology, and management review. Cutting a filing doesn’t cut the work behind it. The books still close, liquidity still gets watched, and directors still need dependable information.
Three audiences deserve separate design. Management needs information fast enough to act. Directors need enough to challenge assumptions and judge resilience, and public filing deadlines shouldn’t set that standard. Outside parties need what law, contracts, and disclosure policy require. The three can share underlying data without sharing a schedule. When management sees reliable numbers only as the quarterly filing nears completion, the company has confused reporting with managing.
What the EU and UK Experience Already Shows
Public companies in the European Union and the United Kingdom have worked under half-year rules for more than a decade. The European Parliament and Council adopted Directive 2013/50/EU of the European Parliament and of the Council in 2013. Its recital 4 calls quarterly management statements and reports a burden for small and medium-sized issuers “without being necessary for investor protection.” The Financial Conduct Authority (FCA) moved first, removing the United Kingdom’s requirement on November 7, 2014. Its policy statement, Removing the Transparency Directive’s requirement to publish interim management statements, confirms that issuers could keep publishing quarterly updates voluntarily, and it left the half-yearly reporting rules in place. EU member states had until November 2015 to act.
The half-year report is a real filing. The European Securities and Markets Authority publishes the rule as Article 5 Half-yearly financial reports, which requires condensed financial statements, an interim management report, and signed responsibility statements within 3 months of the period’s end. The FCA Handbook mirrors it in DTR 4.2 Half-yearly financial reports. Neither requires an audit or an accountant’s review, though an issuer must say so when the report has had neither. Proposed Form 10-S keeps the 40 or 45 day deadline and requires an accountant’s review.
Suresh Nallareddy, Robert Pozen, and Shivaram Rajgopal studied the UK change. Their paper, Consequences of Mandatory Quarterly Reporting: The U.K. Experience, found that companies moving back to semiannual reporting showed no detectable increase in investment and a reduction in analyst coverage. The authors’ brief for the CFA Institute Research Foundation, Impact of Reporting Frequency on UK Public Companies, covers the same research and adds detail. Of 471 UK public companies in the 2014 sample, 45 had stopped quarterly reporting by the end of 2015, fewer than 10%. The ones that stopped tended to be smaller and had not given earnings guidance, and the authors say part of the coverage drop may relate to that.
The UK’s quarterly updates were lighter than a Form 10-Q, and the brief found that the quarterly disclosures companies kept publishing were more qualitative than quantitative. The research also follows companies for roughly a year after the change. That makes it useful but not conclusive for the U.S. question.
The United States has its own precedent. Foreign private issuers listed here effectively file semiannual reports, and Skadden observes that many still issue quarterly releases and hold calls because markets want them. Where optional quarterly reporting is the norm, companies design the quarterly layer for themselves, with no statutory form to copy. Your board would be doing the same.
Build the Map Before the Vote
The exercise costs little. The final rule may narrow, change, or stall, and the map holds up either way. List every quarterly deliverable your company owes, sort each into the three layers, and record who requires it, what clause or rule sets the timing, and who can change it. Then ask five things:
Who needs information between formal reporting dates, and which of those needs sit in agreements that name quarterly statements outright or point to your SEC filings?
What would actually change in the finance workload, once you separate the cost of public filings from the work of management reporting, controls, credit compliance, and governance?
Which numbers would the earnings release carry on its own, and would your auditor still review the first and third quarters, whether for comparatives, for underwriters, or to keep a path back to quarterly reporting?
UK companies that stopped quarterly reporting saw analyst coverage fall, so how would your investors and analysts respond, and how would management communicate material developments between filings?
Do management and directors see numbers current enough to spot deterioration or opportunity before it gets expensive, and does your internal forecasting hold up without the quarterly deadline?
The questions span finance function design and investor communication. The close calendar, controls testing, and covenant reporting all run on the quarterly clock, and the release and the call may become the main quarterly voice your investors hear.
Both sides have a serious case. The SEC argues that flexibility could cut compliance cost and free management time, and Business Roundtable has argued that quarterly reporting feeds short-termism. Industry and investor groups such as SIFMA, the Investment Company Institute, and the CFA Institute opposed the proposal, and Skadden lists transparency, information asymmetry, and investor protection among the concerns raised.
A stalled rule still leaves you with a clear picture of what you owe, to whom, and under what assurance. If optional quarterly reporting arrives, your board makes the election knowing what it can change and what it can’t. Who in your company can name every place a quarterly number has to land?
This article offers general analysis of a proposed U.S. securities rule and does not constitute legal, accounting, or investment advice. Proposed terms may change before any final adoption, and companies outside the United States face different rules. Consult qualified advisers about your own circumstances.
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