Efficient markets will sustain quarterly reporting

The market’s verdict on financial reporting cadence is in: Four times good, two times bad. Of some 113,000 public comments submitted to the U.S. Securities and Exchange Commission, 264 support a proposal to let publicly traded companies disclose details about their performance semi-annually instead of quarterly; the other 99.5% are opposed. It would take bravery from the agency and CEOs to defy such resistance.

President Donald Trump is a vocal and influential proponent of giving boards flexibility to publish earnings every six months if they choose. He leads a small chorus singing the praises of associated cost savings and reduced management myopia. Oil producer ExxonMobil XOM.N and drug maker Eli Lilly LLY.N are among those to say they would take advantage of less frequent reporting requirements. Other corporate lobbyists, including the Business Roundtable, also back the plan, which follows similar approaches in Britain and elsewhere.

Dissent is overwhelming, however. Even setting aside some 66,000 form letters, based on tallies by Professor Tzachi Zach at Ohio State University’s Fisher College of Business, the message from investors could not be clearer. Fund management goliath Vanguard, for one, pushed back against the proposal and makes the case that quarterly reporting, in place since 1970, helps companies lower their cost of capital while improving price discovery and reducing information asymmetry. The SEC’s three-part mission is to facilitate capital formation, keep markets efficient and, most importantly as retail money floods into stocks, protect investors.