Following a tweet from the President last August, the SEC has begun the process of reviewing the existing quarterly reporting regime and will be further exploring possible changes that may ease administrative and other burdens on public companies. Specifically, the President “asked the SEC to study!” whether less frequent reporting for publicly traded companies would “allow greater flexibility and save money.” This is not a new issue on the SEC’s radar screen, but it has recently regained traction– the SEC issued a concept release in 2016 soliciting public comments more specifically on reporting frequency and the current quarterly reporting process.

The request for comments, which can be viewed here, asks for public input on several questions related to the existing reporting regime. One of the more interesting questions on which the SEC is seeking input is whether the practice of public companies issuing forward earnings guidance places undue pressure and focus on short-term results and negatively impacts long-term results. Several commentators have expressed concern on this issue over the years and believe management teams with a longer-term view would be better stewards of investor capital. Many of the other specific questions asked by the SEC in its request for comments relate directly to the current reporting process and whether changes could be made that balance the interests of investors while making the reporting process more efficient, including, among other things:

  • The effect of possibly eliminating XBRL requirements for Form 10-Qs;
  • Whether an earnings release issued on Form 8-K could satisfy some or all of the Form 10-Q requirements;
  • The effect of permitting the omission of duplicative information from the Form 10-Q if previously disclosed in an earnings release on Form 8-K;
  • How changes in the current quarterly reporting process may affect corporate decision-making; and
  • Whether it would be more beneficial to move to a semi-annual reporting model or some other more flexible model.

Although this undertaking may appease the President, SEC Chair Jay Clayton has said that the quarterly reporting model isn’t likely going to change any time soon, especially for larger companies, since investors expect them to disclose their results on a quarterly basis. Thus, this process may be largely for the purpose of demonstrating that he’s paying attention to the President.

The comment period will remain open for 90 days following publication in the Federal Register (which could be delayed in the event of a government shutdown). Comments may be submitted to the SEC here. Although the SEC is seeking comments on specific questions and issues, commenters are not limited in the scope of their submitted comments.