The question of whether quarterly earnings reporting helps or harms long-term value creation has returned to the US policy agenda. As a former fund manager, I can appreciate the appeal, but as someone who currently spends her days analyzing investor decision-making data, I see the implications of a shift to semi-annual reporting as far broader than the familiar short-termism argument suggests. Reducing the cadence of earnings releases would amount to a major behavioral intervention in how market practitioners learn, recalibrate, and compete.
While proponents argue that quarterly disclosure causes both companies and investors to fixate on short-term results (McKinsey research links short-term focus to lower ROIC[1]), the market consequences for investment professionals are more complex and subtle than this suggests — with different implications for different parties.
From a big picture perspective, moving to a semi-annual earnings cycle would likely slow feedback loops, widen the dispersion in investment decision quality, shift informational advantage, and increase uncertainty for quantitative models and benchmarks.
Having been a portfolio manager in the United Kingdom when companies reported only twice a year, I recall how much more enjoyable fundamental investing was under that structure. We genuinely thought longer-term, and the administrative burden was lighter for everyone involved, so I can appreciate the argument for making the change.
However, as someone who now spends her days distilling useful insights from data, my instinct is that removing quarterly earnings would reduce transparency in a way the industry can ill afford. For all its flaws, quarterly reporting remains one of the few structured feedback mechanisms available to public investors. It anchors accountability and gives practitioners a regular opportunity to recalibrate expectations, test hypotheses, and revisit assumptions.
Eliminating that rhythm would lengthen the feedback cycle and weaken the industry’s collective learning mechanism. Essentia’s data show that decision-making quality improves most when feedback is timely, structured, and specific, precisely the qualities quarterly reporting delivers.
Winners, Losers, and Unintended Consequences
Moving from quarterly to semi-annual earnings reports would be a significant behavioral intervention, designed to reduce short-termism but certain to carry a range of intended and unintended consequences.
For regulators such as the SEC, the Fed, and other monitors of systemic risk, eliminating quarterly earnings would mean a 50% reduction in a data source they rely on heavily. Less frequent corporate information would slow feedback loops and could delay the detection of emerging risks, a concerning dynamic in an era of index funds, algorithmic trading, and rapid capital movement.
Perhaps the biggest winner from a lengthening of the cadence of earnings reports would be the fundamental active fund management industry.
It is also hard to imagine company management being anything other than pleased by the prospect of less-frequent public reporting. It would feel like a windfall to decision-makers who want more room to focus on long-term strategy rather than on managing the share price each quarter. It might even help revive the ailing IPO market, where the reporting burden associated with quarterly earnings remains a meaningful deterrent to going public.
Corporate governance advocates would argue (and I would agree) that reduced transparency increases the risk of poor management or even malfeasance going unnoticed. That said, with the infrastructure already in place for quarterly internal reporting, there is little reason to think that well-intentioned management teams would neglect governance; they simply would not face the burden of reporting it publicly every three months.
Quant and systematic strategies that depend on a continuous flow of reported fundamentals to recalibrate factor exposures, forecast risk, and validate machine-learning inputs would face clear challenges. That said, many are likely already running scenarios and adjusting their factor construction and risk-monitoring practices in anticipation of such a shift.
Perhaps the biggest winner from a lengthening of the cadence of earnings reports would be the fundamental active fund management industry. Less frequent public information means more room for alpha generation: more space for expertise to make a difference, whether that expertise comes in the form of a human, a computer or, increasingly, a mix of both. This is an environment where fundamental analysts and PMs must adjust their research cycles and model inputs to a more extended timeline, prioritizing proprietary research.
Quant and systematic strategies that depend on a continuous flow of reported fundamentals to recalibrate factor exposures, forecast risk, and validate machine-learning inputs would face clear challenges. That said, many are likely already running scenarios and adjusting their factor construction and risk-monitoring practices in anticipation of such a shift.
Anyone whose product relies on frequent disclosures to evaluate governance, compensation alignment, and ESG progress would likely suffer.
Alternative data providers would likely see an acceleration in demand as firms redeploy the time and resources currently devoted to earnings processing into data that can illuminate the gaps left by less-frequent disclosure. By contrast, providers whose products rely on regular filings to evaluate governance, compensation alignment, and ESG progress would face clear challenges.
It is less clear whether the sell-side would be a net winner or loser. Much of equity research, sales, and corporate broking activity is anchored around earnings season, and without that event, trading catalysts would diminish. Halving the frequency of formal results would mean fewer opportunities to publish notes, host calls, and capture client attention.
The financial media would also lose a key driver of readership and engagement. A slower cadence would shift narrative power from reported data to speculation, potentially reducing accountability for both journalists and analysts.
Could fewer public earnings calls help preserve the roles of equity research analysts? The threat of AI to junior analysts remains, but the expertise within the seasoned sell-side community could become more valuable. Knowing which questions to ask and which data to analyze between formal earnings announcements is an experienced analyst’s stock-in-trade, and a slower cadence could reinforce the importance of that skill set.
In a similar vein, less frequent and standardized disclosures would create challenges for the passive investment ecosystem, which depends on regular, standardized reporting to maintain index accuracy and benchmark integrity. Allocators and institutional managers using these products would face greater staleness risk in index composition and weighting, particularly in volatile markets, increasing the likelihood of tracking error.
Reduced transparency would make passive investing riskier, weakening one of its core value propositions.
Ultimately, the debate over quarterly versus semi-annual reporting is not only about disclosure cadence but about feedback loops, incentives, and behavior. Slowing that rhythm may trade some transparency for depth of thought. The clear practitioner takeaway is this: Regardless of the reporting frequency, success will depend on disciplined investment decision-making, effective process monitoring, and the ability to use alternative data and feedback sources to fill informational gaps.
[1] McKinsey & Company and FCLTGlobal, Corporate Long-Term Behaviors: How CEOs and Boards Drive Sustained Value Creation (October 2020), p. 36.
