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Research has consistently shown that the quarterly corporate cycle in the United States drives a myopic focus on meeting short-term targets over sustainable value creation. Foundational research from FCLTGlobal found that 88% of executives agree that longer time horizons would improve performance.1

As recent proposals from the Long-Term Stock Exchange and renewed prompts by the White House once again bring this issue to the forefront, FCLTGlobal believes this is an opportune moment for the SEC to reexamine the current standard to ensure it serves the interests of long-term value creation.

The quarterly reporting requirement was designed for a market environment markedly different from today’s. The investment landscape has evolved substantially—becoming more professionalized, specialized, and data-rich. Furthermore, the private equity market has evolved considerably and is not subject to disclosure requirements.

Simultaneously, research continues to shed light on how reporting frequency influences corporate decision-making and resource allocation.

Alternative approaches have been demonstrated in the UK and European Union, where corporations are permitted to report less frequently, complemented by requirements for timely disclosure of significant events. Such a system can both reduce the need to orient all communications on three-month intervals and maintain transparency, which is paramount in any eventual rule change.

It is critical to distinguish between mandatory quarterly reporting (retrospective disclosure of performance) and voluntary quarterly earnings-per-share (EPS) guidance (forward-looking projections). FCLTGlobal research has consistently indicated that earnings guidance, specifically, does not improve company valuation, reduce volatility, or enhance management accountability, and it has declined in prevalence as a result:4 Close to 50 percent of large-cap companies in 2004 put out quarterly forecasts, compared to 21 percent in 2024. Though distinct from reporting, EPS guidance has become emblematic of the 3-month cycles that some public companies feel stuck in, and which many are evidently trying to escape.

As such, FCLTGlobal supports an SEC review of current quarterly reporting requirements, examining whether the existing framework serves its dual mandate of investor protection and capital formation in today’s market environment. This review should consider:

  1. Reporting flexibility that allows companies to align disclosure frequency with their business models and strategic timelines
  2. Enhanced material event disclosure requirements to maintain transparency between formal reporting periods
  3. Alternative reporting formats, such as year-to-date or trailing twelve-month disclosures, that provide context while reducing short-term focus
  4. The continued distinction between mandatory reporting and voluntary guidance practices

We do not advocate for the wholesale elimination of corporate reporting. Rather, we believe a modernized framework can maintain robust transparency and accountability while also prioritizing long-term value creation over short-term returns.

  1. Dominic Barton, Jonathan Bailey, and Joshua Zoffer, “Rising to the Challenge of Short-Termism” (FCLT Global, 2016), https://www.fcltglobal.org/wp-content/uploads/fclt-global-rising-to-the-challenge.pdf.

  2. Keita Haga, Akinobu Shuto, and Takuya Iwasaki, “Does Mandatory Quarterly Reporting Induce Managerial Myopic Behavior? Evidence from Japan,” Journal of Contemporary Accounting & Economics 19, no. 3 (2023), https://www.sciencedirect.com/science/article/abs/pii/S1544612323005147.

  3. Jürgen Ernstberger, Benedikt Link, Michael Stich, and Oliver Vogler, “The Real Effects of Mandatory Quarterly Reporting,” The Accounting Review 92, no. 5 (September 2017): 33–60, https://doi.org/10.2308/accr-51705.

  4. FCLTGlobal, “Moving Beyond Quarterly Guidance: A Relic of the Past,” 2017, https://www.fcltglobal.org/wp-content/uploads/Moving-Beyond-Quarterly-Guidance-A-Relic-of-the-Past.pdf.

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