Trump-backed SEC proposal draws investor opposition, while the CSA eases filing for small issuers
Investors have pushed back against a US plan to let public companies report results twice a year rather than every quarter, with the balance of comment letters filed by Monday's deadline favouring the current rules.
The US Securities and Exchange Commission proposed in May to allow companies listed on US exchanges to switch to semiannual reporting, acting on a public call from US President Donald Trump.
Reuters reported that the responses exposed a split between investors seeking more disclosure and corporate boards hoping to escape the pressures of earnings season.
The US regulator said the change could curb short-termism among corporate leaders and reduce accounting and compliance costs.
It also acknowledged risks, including leaving some investors less informed, eroding perceptions of fairness and weakening oversight of corporate conduct.
The Investment Company Institute, a US body representing mutual and exchange-traded funds, told the SEC it supported easing burdens on companies.
But a survey of 14 members holding US$6.1tn in assets found they viewed quarterly reports as either highly important (62 percent) or moderately important (29 percent), according to its comment letter.
The Managed Funds Association, representing hedge funds and other asset managers, also urged the SEC to scrap the proposal, and Bryan Corbett, its president, said timely and material information was essential to investors.
The California Public Employees' Retirement System and the American Accounting Association also opposed the change, according to Reuters.
The accounting group warned that semiannual reporting could let accounting problems go undetected for longer, "potentially increasing the costs to remediate when eventually discovered."
Separately, the CFA Institute reported that its own survey of 2,500 analysts and portfolio managers, conducted in January, found 62 percent opposed a switch to semiannual reporting and about 70 percent opposed letting companies set their own reporting frequency.
Nearly 85 percent raised concerns about comparability between companies, the body said on 10 June.
Matthew Winters, the institute's senior director of corporate disclosures and information advocacy, said the central question was what investor problem the SEC was trying to solve, and the report recommended keeping mandatory quarterly reporting.
Winters told Accounting Today that respondents viewed quarterly reporting's benefits as outweighing its costs and warned that cutting frequency could weaken comparability, widen information gaps and impair market efficiency.
Most also expected many companies to abandon it if it became optional, leaving investors with less information.
Investor views were not uniform.
CFO Dive reported that 82 percent of respondents would accept voluntary quarterly reporting if a semiannual mandate took effect, though only 32 percent expected companies to keep reporting quarterly once it became optional.
Some 78 percent wanted to retain the US Form 10-Q requirement, and half said any cut in frequency should come with more extensive interim disclosure.
Some large US market participants have welcomed the plan.
According to Reuters, JPMorgan and Nasdaq are among those backing it, arguing it would let companies take a longer-term view and strengthen capital markets.
Mark Uyeda, an SEC commissioner, argued in a May statement that a framework built roughly 75 years ago should not be assumed to fit every company in 2026.
Mandatory quarterly reporting could also push management toward short-term thinking, he said, citing former SEC chairman Arthur Levitt on weighing long-term health over quarterly earnings.
Sandra Peters of the CFA Institute questioned whether heavy rules were keeping companies private, saying there was no empirical evidence that less disclosure would produce more public companies, Reuters reported.
The US debate is unfolding as Canada tests a similar approach.
The Canadian Securities Administrators adopted a semiannual reporting pilot on 19 March through Coordinated Blanket Order 51-933, exempting eligible venture issuers on the TSX Venture Exchange or the Canadian Securities Exchange from filing first- and third-quarter reports under National Instrument 51-102.
Stan Magidson, the CSA's chair, said the pilot supports the competitiveness of Canadian capital markets, particularly for smaller venture issuers.
The Canadian pilot is narrower than the US proposal, applying only to venture issuers with revenue up to $10m, and Norton Rose Fulbright noted that if the US plan advances, it could bolster the case for widening Canada's framework beyond venture issuers, something the CSA has flagged as a consideration.
Monday was the deadline for comments on the US proposal, and the SEC declined to give a timeline for next steps, Reuters reported.
SIFMA and its asset management group had asked the regulator to extend the window by 60 days, noting it fell on the 250th anniversary of American independence.
The United States has required quarterly reports since 1970, while many other countries allow semiannual disclosure.
