The SEC's Semi-Annual Reporting Proposal: What the European Evidence Actually Shows

On May 5, 2026, the SEC formally proposed amendments that would allow US public companies to file semi-annual reports on a new Form 10-S in place of three of the four current 10-Q filings. Chairman Paul Atkins framed the proposal as "increased regulatory flexibility." Trump has been pushing for the change since 2018. The SEC chair he appointed is now in a position to deliver it.

Most of the early commentary is treating this as a binary fight: short-termism versus transparency, deregulation versus investor protection. The empirical question that should anchor the debate is mostly being skipped, and the answer to it does not flatter the proposal.

Most US Companies Investors Care About Will Not Switch

Start with the names that everyone covers. Apple, Microsoft and JPMorgan are not going to test their shareholder base by going dark for six months at a stretch. Citadel and Fidelity have already publicly defended the current schedule. A 2019 CFA Institute survey found 59% of respondents against a move to semi-annual reporting. The mega caps will keep filing quarterly because their investor base demands it.

The companies that will actually take up the option are smaller. Small and mid-caps where the compliance bill is a real share of operating expense, and where the cost of preparing a 10-Q is not amortized across a large team of accountants and lawyers. That is also the part of the US market where sell-side coverage was already thin before the rule change.

The European Comparison Does Not Mean What Proponents Think

The standard argument for the proposal points to Europe and says: they only report twice a year, their markets work fine, US companies should have the same option. The argument has the diagnosis backwards.

In several large European jurisdictions, including the UK and France, companies already have flexibility on reporting frequency. Quarterly reporting was never the default in the way it is in the US. So the natural experiment Europe offers is not "what happens if a market is forced to report semi-annually," but "what do companies pick when they are free to choose."

The answer is that quarterly reporting persists wherever investors want it. A meaningful share of FTSE 100 companies, particularly in financials, oils and miners with significant US shareholder bases, continued to publish quarterly results long after the UK dropped its quarterly requirement in 2014. Many continental issuers do the same. When the disclosure cadence is a choice rather than a mandate, large numbers of issuers keep it on the higher-frequency setting because their cost of capital depends on it.

This is the central finding of Nallareddy, Pozen and Rajgopal (2017), the empirical study most often cited on the UK natural experiment. When the UK eliminated mandatory quarterly reporting in 2014, only 9% of sample firms stopped issuing quarterly reports in the first year¹. Firms that voluntarily moved to semi-annual reporting did so because they wanted to, not because markets demanded it. Given a free choice, the revealed preference of UK companies in the immediate aftermath was to keep reporting quarterly.

The drop accelerated after that. By August 2017, Investment Association data showed only 57 of the FTSE 100 still issued quarterly reports, down from 70 in October 2016 and 100 prior to the rule change². Over 60% of FTSE 250 companies had also stopped quarterly reporting by then. A more recent Goldman Sachs review found that most UK-listed companies have now migrated to semi-annual. The drift was real, but it played out over years and tracked a period in which the London Stock Exchange struggled to attract new listings and retain existing ones, with no visible improvement in valuations, IPO volumes or capital formation.

The UK is not the only market where quarterly reporting has been a choice rather than a default. Reporting cadence varies more by jurisdiction than the "Europe versus the US" framing suggests:

The pattern across markets that have moved away from mandatory quarterly reporting is consistent. The rule change is the easy part. The market response is slow, uneven, and driven more by investor demand than by regulatory permission. Where investors want quarterly information badly enough, companies provide it whether or not the regulator requires it.

Trading Updates: The Quarterly Disclosure That Is Not a 10-Q

The form that voluntary quarterly information takes in Europe is also worth understanding, because it does not look like a 10-Q. "Semi-annual reporting" in the UK and France in practice means semi-annual full reporting plus quarterly trading updates. A trading update is a much shorter document, two to five pages, summarizing sales by division, year-on-year revenue growth, key operating metrics, and any change to full-year guidance. It looks more like the press release a US company puts out alongside its 10-Q earnings call than the 10-Q itself. No full income statement, no balance sheet, no cash flow, no MD&A in the US sense.

Around the document itself, many large UK and French issuers also hold a brief earnings call, particularly the FTSE 100 financials, the oils and the CAC 40 consumer names. The substantive market interaction with management therefore happens four times a year, even though formal regulatory filings only happen twice. Investors get a cadence of information that is closer to the US quarterly rhythm than the bare reporting calendar suggests.

The lighter format comes with a cost. Trading updates are not subject to the same audit assurance, internal-control attestation or fair-disclosure scrutiny as a 10-Q. They privilege brevity over regulatory precision. Selective disclosure risk is higher when management is summarizing performance in narrative form rather than filing a complete set of financial statements. UK and French issuers have built up a body of practice around what trading updates can and cannot say, and disputes about adequacy of disclosure happen periodically when an update either tells the market too much or too little.

This is the most likely template for what US companies opting into the new Form 10-S regime will actually do. A small or mid-cap that drops its 10-Qs but wants to keep its analyst base will not go fully dark for six months. It will publish quarterly trading updates of some form, hold a brief call, and rely on selective 8-K disclosures for anything material. Investor communication falls in volume but not to zero. The open question is whether US institutional investors accept that substitution at face value, or whether they price in the lower assurance level the way they would for any unaudited management commentary.

The Read-Across from the UK is Not a Clean One

Even granting that European companies adapt to a semi-annual regime through trading updates, the UK evidence has a deeper limitation when applied to the US. The two markets are not symmetric environments for this kind of rule change.

In the UK, quarterly reporting was a relatively recent imposition. It was mandated in 2007 and dropped in 2014. It was never the cultural default for what good corporate governance looked like. When a UK company moved to semi-annual reporting after 2014, it was reverting to a long-standing norm. The signaling cost of the switch was low because nothing about the choice was unusual.

In the US, quarterly reporting has been the standard for more than fifty years. It is embedded in how institutional investors think about coverage, how index providers structure data, how compensation committees set bonus periods, how the sell-side organizes earnings season. A US small or mid-cap that opts into semi-annual reporting under the new rule is not reverting to a norm. It is opting out of one that everyone else is following. The market will read that as a signal, and the prior on what the signal means is unlikely to be flattering. "Companies that report semi-annually have something to hide" is a sentiment that will exist whether it is empirically warranted or not.

This is the part of the policy design that the natural-experiment literature cannot fully resolve. The Nallareddy, Pozen and Rajgopal results describe what happens, on average, to companies whose reporting frequency is changed by a rule that applies to everyone. They tell us less about what happens to a single company that voluntarily steps off a frequency that the rest of the market is keeping. That is a different question, and signaling does most of the work in answering it.

The SEC is not designing a disclosure regime from scratch. It is changing one half of an institutional system, leaving the other half (investor expectations, analyst infrastructure, governance norms) in place and assuming the two will adjust together. They probably will, eventually. In the meantime, the companies that switch first will be doing so against a baseline expectation built up over five decades, and the firm-level cost-of-capital hit can be much larger than the average across a market-wide rule change.

The Short-Termism Argument Is the Weakest Part of the Case

The signaling problem and the evidentiary limits aside, the SEC's case also fails on its own stated terms. The short-termism argument proponents reach for ("China takes a 50-year view, we run companies on a quarterly basis") is the part of it least supported by the evidence.

Most other major markets already report semi-annually. There is no clean evidence that companies listed in those markets are run with a longer horizon because of it. Management horizon is set by incentives, ownership structure and capital allocation discipline. Reporting cadence is a small input.

Nallareddy, Pozen and Rajgopal looked specifically at this in the UK data. When UK companies were forced to report quarterly in 2007, the authors found no statistically significant reduction in capital expenditure, R&D or PP&E investment among the companies switching to quarterly for the first time. When companies were allowed to stop quarterly reporting in 2014, they did not find a statistically significant increase in investment among the stoppers either. R&D, M&A and capex decisions have multi-year horizons. They do not operate on three-month cycles, and they will not start operating on six-month cycles because the SEC changes Form 10-Q to Form 10-S.

The same authors note that the SEC proposal cites earlier work by Graham, Harvey and Rajgopal (2005) showing that CFOs cut R&D on the margin to meet earnings targets. The paper is real, but the conclusion the SEC implies (that quarterly filings cause this behavior) is not what it actually says. The pressure comes from the broader incentive architecture: analyst consensus, quarterly earnings guidance, EPS-linked compensation, institutional investor focus on near-term results. The 10-Q is the scoreboard, not the game. Removing the scoreboard does not change how the game is played.

The 8-K Cannot Fill the Gap Between Filings

The SEC proposal argues that Form 8-K filings, required within four business days of a material event, will keep investors informed between semi-annual reports. This understates what 10-Qs do.

An 8-K tells investors that something material has happened. A CFO has departed. A major contract has been won or lost. A regulatory action has been brought. What an 8-K does not provide is the income statement and balance sheet impact of that event: the effect on next-quarter revenue, on operating margins, on debt covenants, on working capital. That financial translation is exactly what the next 10-Q would have provided. A company that discloses a major customer loss via 8-K has flagged that something changed, without giving investors any financial map of where they now stand. Under semi-annual reporting, that map can be six months away.

Where the Change Actually Shows Up: Cost of Capital

Markets price information gaps. The proposal gives companies flexibility on filing frequency, but it does not change what their shareholders are willing to accept in return.

A small or mid-cap that drops to semi-annual against the wishes of its investor base will pay for it in the cost of capital. The market gets to vote even when the regulator stops requiring a particular disclosure cadence. The mechanism is well-documented in the disclosure literature: less frequent reporting raises information asymmetry, and information asymmetry shows up as higher equity risk premia and wider bid-ask spreads. The empirical work on the UK post-2014 transition shows that companies which moved to semi-annual reporting saw declines in analyst coverage, and the decline was steepest among the small and mid-caps where coverage was already thin.

The same mechanism applies in reverse to the proposal's IPO argument. The defining feature of an IPO is information asymmetry between management and a public market seeing the company for the first time. Quarterly reporting is one of the few mechanisms that lets the market test management's IPO narrative against real results, quarter by quarter. Moving newly-public companies to semi-annual reporting amplifies the asymmetry rather than reducing it. An investor who bought shares in a January IPO would now wait until August to see any systematic financial accounting of whether the IPO narrative matched reality. Insiders know. The public does not. The likely outcome is higher risk premia on newly-public stocks, not a deeper IPO market.

For the analysts who do stay on the names that switch, the workflow changes. The gap between data points doubles, from three months to six. Off-cycle 8-Ks carry more weight. Channel checks, alternative data and management access have to do more of the lifting. Quarter-to-quarter modeling becomes half-yearly with much wider error bars. With less interim financial data to anchor against, forward-looking guidance gets more analyst attention than it used to.

What the SEC Could Do Instead

A defensible version of this reform exists, just not the one on the table. The 10-Q as currently structured is dense, repetitive, and full of boilerplate that is not decision-relevant for institutional investors. A targeted overhaul of the 10-Q, focusing required disclosure on what actually moves a thesis and allowing more sector-specific guidance about materiality, would address the genuine compliance burden without removing the cadence the market relies on. Lengthening executive pay duration, addressing the real barriers to going public (lower interest rates pre-2022, litigation risk, the 7% IPO underwriting tax), and improving small-company analyst coverage would do more for long-term capital formation than changing the filing schedule.

If the goal is curbing short-termism, the levers that actually move management horizon are compensation structure, ownership base and board composition. Form 10-S is not one of them.

The honest read on the proposal as drafted is that it is small-cap compliance relief in long-term capitalism clothing. For analysts covering small and mid-caps, that means leaning harder on management quality and on tracking guidance against actuals once the quarterly data thins out. Watch the small-cap risk premium for the names that switch first. On the UK evidence, it reprices.