SEC proposal for semiannual earnings reports draws 280,000 opposing comments

Investors warn less frequent reporting could raise companies’ cost of capital

The Securities and Exchange Commission’s May 2026 proposal would replace a 1970 requirement that registered companies disclose their earnings every three months with an option to report every six months. The agency has said the change would reduce companies’ compliance costs and push executives toward longer-term planning rather than short-term earnings management. The proposal estimates average savings of about $200,000 per firm annually.

Public comment on the proposal has been unusually heavy. More than 280,000 letters have been submitted, with over 99% opposed, according to a comment tracker built by Tzachi Zach, an accounting professor at the Ohio State University who studies SEC filings. For comparison, Zach noted, a study covering 417 SEC proposals over 30 years tallied just over 65,000 comments in total.

Investor letters have centered on a trade-off between compliance savings and the cost of capital. The Securities Industry and Financial Markets Association, a major trade group, wrote that estimated net savings “could be offset or outweighed by an increase in the cost of capital as investors demand higher risk premia for less timely information.” Asset manager Federated Hermes added in its own letter that issuers choosing semiannual reporting “may face signaling risks, as investors could interpret such a choice as reflecting reduced transparency” — a perception that could affect analyst coverage and the price a company pays to borrow or issue shares.

For retail investors, the proposal’s reach extends through 401(k) plans, individual retirement accounts and other funds whose holdings are directly exposed to company performance. “My husband worked for Enron. We lost most of our retirement savings when their fraudulent activity came to light,” one commenter wrote. “We were still young enough to make some of that income back, but we knew many retirees who ended up working into their 80’s. Quarterly reporting is a gate keeper. Keep it.” Another commenter wrote, “I rely on quarterly reporting for the same reason your child gets a quarterly report card. … There the metaphor ends, because a good teacher can catch failing performance and course correct with parents long before report cards are issued. Investors do not have that luxury.”

Some companies have already said they would take advantage of the change. Drugmaker Eli Lilly, in its official comment, said it would prefer semiannual reporting. Financial Executives International, an industry lobbying group, wrote that 58% of the member companies it surveyed said they would switch. The commission is still evaluating feedback before a final vote, and it is not yet clear how many firms would adopt the new option.

The commission’s composition is also unusual. The five-member body traditionally has three members from the president’s party and two from the minority; both Democratic seats are currently vacant, and one Republican seat is about to be vacated. With the panel short-handed, the SEC suggested on Sept. 30, 2026, a procedural change that would let the semiannual-reporting proposal clear with support from just two commissioners. SEC Chair Paul Atkins has said the commission is moving ahead.

The SEC’s own Investor Advisory Committee, an independent body, offered a skeptical assessment of the underlying premise. “The evidence does not support the view that short-termism is a major problem for U.S. public companies today, nor is there strong evidence to support the view that costs for public companies would be significantly reduced,” the committee wrote.

This article was originally published by The Conversation and republished by United Press International under a Creative Commons license. It was written by Tzachi Zach, a professor of accounting at The Ohio State University.