The U.S. Securities and Exchange Commission is preparing a proposal that would let publicly traded companies report earnings twice a year instead of quarterly.
It is a change that supporters say could reduce pressure to make short-term decisions.
President Donald Trump and SEC Chairman Paul Atkins support the idea. They argue that quarterly reporting can push companies to prioritize near-term results over long-term growth.
Critics argue that less frequent reporting could reduce transparency for investors and limit insight into company performance.
A study from the McKinsey Global Institute found 87% of executives said short-term pressure has increased, while 65% said they would delay a positive investment to meet quarterly targets. The same report found that more than 40% of companies that miss earnings estimates still see their stock prices rise.
The European Union and the United Kingdom eliminated mandatory quarterly reporting about a decade ago. A CFA Institute study found no harm to corporate investment. Additionally, many companies continued reporting quarterly voluntarily.
The issue has surfaced in corporate disputes, including a conflict involving CoStar Group and its residential listings platform, Homes.com.
Hedge funds Third Point and D.E. Shaw have pushed CoStar to shut down Homes.com, a platform built to compete with Zillow.
Antitrust scholar Hal Singer said D.E. Shaw holds about $204 million across Zillow, Opendoor, Rocket/Redfin, Compass, and Anywhere Real Estate. Meanwhile, he said Third Point held roughly $184 million in Redfin’s parent company. He said neither disclosed those stakes in letters to CoStar’s board.
Singer added that D.E. Shaw owns just 0.22% of CoStar’s stock but holds about four times that value in CoStar’s competitors.
The consumer impact is also part of the debate.
Zillow routes buyers away from listing agents and collects referral fees of up to 40%. Meanwhile, Homes.com connects buyers directly to the listing agent with no fees.
The Federal Trade Commission has sued Zillow and Redfin over an alleged $100 million deal to suppress rental listing competition.
Supporters of the SEC proposal argue that quarterly cycles can increase pressure from activist investors seeking short-term gains.
Performance data for hedge funds has also drawn scrutiny. Third Point’s flagship Offshore Fund has underperformed the Russell 3000 in nine of the past 10 years, while D.E. Shaw’s Composite Fund has underperformed in seven of the last 10.
The SEC has not released full details of the proposal. The idea will likely draw input from investors, companies, and policymakers.
