Note: Featured image is for illustrative purposes only and does not represent any specific product, service, or entity mentioned in this article.
The Problem With 90-Day Thinking
For decades, public companies have operated on a relentless quarterly reporting treadmill—preparing financial statements, crafting narratives for investors, and answering endless questions from analysts. This 90-day cycle, while intended to provide transparency, has increasingly been criticized for encouraging short-term decision-making at the expense of sustainable value creation. Recent developments suggest we may be approaching a tipping point in how companies report their performance.
Research consistently demonstrates that quarterly reporting pressures executives to prioritize immediate results over strategic investments. A 2023 study of Japanese firms found that when companies are required to report quarterly, managers significantly cut R&D spending and adjust operations to meet near-term targets. Similarly, research published in The Accounting Review examining European companies reached parallel conclusions: firms forced into quarterly disclosure engaged in short-term manipulation that produced brief performance spikes followed by declines.
The Movement Toward Reporting Reform
The call for change is gaining influential supporters. Former President Donald Trump recently urged the SEC to reconsider quarterly reporting requirements, echoing his earlier administration’s scrutiny of the practice. More significantly, the Long-Term Stock Exchange has announced it will petition the SEC to shift to semiannual reporting standards. This push for corporate reporting reform represents a growing consensus that the current system needs modernization.
Nicolai Tangen, head of NBIM which manages Norway’s $1.7 trillion Government Pension Fund, recently called for an end to quarterly reporting, describing it as “potentially damaging to market dynamism.” This perspective from one of the world’s largest institutional investors carries substantial weight in the debate about reporting frequency.
The Evolution of Reporting Requirements
When the SEC established the current quarterly reporting requirement in 1970, markets operated fundamentally differently. Retail investors dominated, professional analysis was less sophisticated, and corporate data was difficult to access. Today’s landscape bears little resemblance—markets are professionalized, specialized, and information on public companies is abundantly available through multiple channels.
The contrast with private markets is particularly telling. Private equity has evolved considerably without similar disclosure requirements, yet continues to attract substantial capital. This reality challenges the assumption that frequent reporting is essential for efficient capital allocation. As industry developments in technology demonstrate, innovation often flourishes outside the public market’s constant scrutiny.
The Guidance Problem
Quarterly earnings-per-share guidance represents a particularly pernicious aspect of the short-term cycle. While distinct from mandatory reporting, this practice—where companies project expected earnings for the next quarter—creates a consensus estimate that becomes a benchmark for success or failure. Media coverage then focuses on whether companies “hit” or “missed” these artificial targets.
Though the practice has declined (from 50% of S&P 500 companies in 2004 to 21% in 2024), it remains emblematic of the 90-day hamster wheel that distracts management from long-term strategy. This focus on short-term metrics parallels broader market trends where immediate results often overshadow sustainable progress.
International Precedents and Alternative Approaches
The United Kingdom and European Union already permit less frequent reporting, complemented by requirements for ad hoc disclosure of significant events. This balanced approach maintains transparency while reducing the quarterly pressure cooker. Evidence from these markets suggests that reducing reporting frequency doesn’t necessarily lead to information asymmetry or poor capital allocation.
Alternative reporting frameworks could include cumulative reporting, simplified disclosure of key performance indicators, or thematic reporting focused on long-term value drivers. As related innovations in other sectors show, sometimes less frequent but higher-quality information creates better decision-making.
Balancing Transparency and Long-Term Focus
The central challenge lies in maintaining robust transparency and accountability while freeing companies from short-term pressures. Critics like Warren Buffett and Jamie Dimon have expressed concern that reduced reporting might mean less transparency. However, given the rise of private companies and their economic importance, it’s difficult to argue that slightly less frequent data would automatically lead to poorer capital allocation or slower growth.
Modern technology enables continuous monitoring of many business metrics, reducing reliance on quarterly filings. The expansion of recent technology infrastructure supports more dynamic information sharing than was possible when quarterly reporting began.
The Path Forward
The SEC should view current petitions as an opportunity to develop a modernized reporting framework that preserves investor trust while encouraging long-term thinking. Making quarterly reporting optional—while maintaining robust semiannual requirements and immediate disclosure of material events—could strike the right balance.
This shift would better align capital markets with the interests of ultimate beneficiaries: savers investing for decades rather than quarters. As we’ve seen with transformative approaches in healthcare, sometimes the most significant advances require rethinking established systems rather than incremental adjustments.
The movement toward reporting reform reflects a broader recognition that sustainable value creation requires breaking free from the quarterly earnings trap. While not a panacea, elongating reporting periods represents a crucial step toward building companies—and an economy—focused on lasting success rather than temporary performance.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
