The United States is considering a shift from mandatory quarterly reporting to a semi-annual regime, reviving debate over whether more frequent disclosure improves transparency or merely adds cost and noise. For Australian boards, the move is a prompt to reassess disclosure practices and investor expectations.
Australia has operated on a semi-annual reporting cycle for more than two decades, a model adopted by the UK and EU in 2013–14. Now the US may follow suit. On 9 September, the Long‑Term Stock Exchange (LTSE) lodged a petition with the Securities and Exchange Commission (SEC), urging it to replace mandatory quarterly reporting — a fixture since 1970 — with a semi-annual regime.
The latest development — initiated by the LTSE — has gained more traction. SEC chair Paul Atkins has signalled intentions to bring forward a proposal, followed by a public comment period of at least 60 days before any final rule is published. A compliance transition would likely be phased.
President Donald Trump has long argued that quarterly reporting imposes unnecessary cost and distracts management. His renewed backing has given the proposal fresh political momentum. The SEC is expected to release a draft rule in April, triggering a formal consultation process and, if adopted, a phased compliance period.
For Australian companies listed or eyeing a listing in the US, any shift remains some distance away. But the direction is clear.
From Australia’s viewpoint, the reform is broadly sensible, says Shane Oliver, head of Investment Strategy and Chief Economist at AMP. “If companies have a US subsidiary or a business in the US, it removes some of the reporting requirements for that part of their business. But if they’re solely Australian-focused, the impact will be minimal.”
The pending US adjustment does, however, present food for thought.
Information asymmetry, investor confidence and volatility
Proponents of quarterly reporting argue it supports transparency by reducing information asymmetry and boosting investor confidence. As a result, says Helen Spiropoulos, Associate Professor of Accounting at the University of Technology Sydney and a researcher in governance and disclosure, “stock liquidity goes up, the bid-ask spread is lower, price discovery is better and therefore the cost of equity capital is lower”.
However, she adds, the research that returned these findings by scholars in the EU and UK also found the effects were concentrated in companies with high levels of asymmetry.
“If you have a company with a lot of growth options and investors don’t know what they are, it can benefit from quarterly reporting,” she explains.
Some proponents of quarterly reporting argue that its elimination may increase market volatility. The extended information gap could lead to potentially larger swings in stock prices when results are revealed.
Oliver counters that quarterly reporting itself can generate volatility. “I have a concern that the only beneficiaries of more frequent reporting are short-term traders and economists, and analysts who love to talk about things,” he says.
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Transparency in the absence of quarterly reporting
Spiropoulos says Australia’s continuous disclosure laws, as enforced by the Australian Securities and Investments Commission (ASIC), could offer a model for the US.
ASX-listed companies must immediately notify the market of information likely to affect security prices, which Spiropoulos says may be more effective than quarterly reporting in limiting insider trading and ensuring timely disclosure.
“Continuous disclosure is more effective than a three-monthly report,” she notes.
Reporting requirements too onerous?
Quarterly reporting advocates in the US express concern that regulation of publicly listed companies in the US has been a cornerstone of one of the most liquid and robust capital markets in the world. However, a recent Nasdaq white paper found that since 2000, the number of publicly listed US businesses on US exchanges declined by 36 per cent. Over the same period, the number of private equity-funded companies increased by 475 per cent.
The paper, along with a second white paper published by the US Chamber of Commerce, recommended one partial but consequential remedy for US companies’ reluctance to list and stay listed — reduce the burden of frequent reporting by offering companies a choice of quarterly or semi-annual cadence.
For large companies, the cost savings of moving to semi-annual reporting are modest, but for smaller companies, they may be material, says Spiropoulos.
“Removing the quarterly requirement would free up companies to take a longer-term perspective,” adds Oliver. “Board reports are often scheduled when the next set of company accounts will be released. If that has to be the focus every quarter, it takes a lot more board time to oversee and sign off all this information, which then unnecessarily distracts them from the longer-term issues”.
Review for quality disclosure over quantity
The SEC will almost certainly offer companies a choice of reporting cadence, while mandating at least semi-annual disclosure. Spiropoulos says research from the UK and EU found that, in the first year after quarterly reporting was no longer mandatory in 2014, 90 per cent of companies continued issuing quarterly updates, likely due to investor pressure.
In Australia, all listed companies must produce semi-annual reports reviewed by auditors, with only the annual report fully audited. Additional voluntary reports, Oliver cautions, can vary in quality and may not offer comparable information.
In a September paper, global law firm Debevoise & Plimpton warned that more frequent voluntary reporting would lack uniform standards, with disclosures governed only by anti-fraud rules, potentially resulting in shareholder litigation and inconsistent or confusing information across industries.
While changing mandated reporting cadence is complex, the proposed US shift offers Australian boards a chance to review disclosure frameworks, investor communications and risk oversight to maintain transparency and credibility amid evolving global expectations.
Checklist for Australian boards
- Review disclosure mechanisms relative to your business and investor needs. Woodruff Sawyer, US-based board liability consultancy, writes on its website: “For companies in fast-moving sectors, quarterly updates may be a non-negotiable to keep stakeholders aligned.”
- Review executive remuneration packages relative to reporting frequency. In September, KPMG’s Board Leadership Centre published a paper, Executive Remuneration – Balancing Performance, Perception and Purpose, which suggests basing incentive vesting on Total Shareholder Return (TSR), which becomes clear only after reporting results are absorbed by the market.
- Ensure reporting is based on quality accounting — unaudited reports may not provide an assessment comparable with audited reports — and brings new pertinent information to light.
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