The SEC is weighing one of the most significant changes to public company disclosure in decades: moving mandatory reporting from quarterly to semiannual. At Morningstar, we’ve effectively been running that experiment for more than 20 years. We’ve never hosted a quarterly earnings call — not once since our Dutch auction IPO in 2005. So when I say this reform is worth making, I’m not speaking theoretically.
The U.S. public markets are world-class. They force companies to operate in the open and make them easier and cheaper for everyday Americans to invest in. The disclosure rules and continuous oversight mean investors get timely, comparable information. As a result, capital is priced better, misconduct is harder to hide, and investment fees are lower. We need more, not fewer, companies to opt in to public markets.
Every quarter, public companies devote enormous resources to preparing 10-Qs, auditor reviews, Sarbanes-Oxley certification procedures, SEC filings, and earnings calls. For many companies, an annual audit and annual SOX compliance process should provide sufficient investor protection when continuous disclosure is timely and enforced. The cost of doing all this four times per year instead of twice is real, and it falls hardest on the smaller, younger companies shaping the economy’s future. For a small software firm, quarterlies mean handling auditor reviews, SOX certification, and filing work before you’ve even shipped the next product release. That’s another incentive to stay private, raise another round of venture capital, and avoid the treadmill altogether.
That pattern is already apparent. The number of publicly traded U.S. companies has fallen from more than 7,000 in 1998 to roughly 4,000 today. Companies are staying private longer, and at times reaching the scale of public firms without ever listing. Private markets surged at twice the pace of the public markets over the past decade, and PitchBook, our private market intelligence arm, counts more than $5.8 trillion in value locked inside private unicorns alone. Yet in 2025, there were only about 200 traditional IPOs in the U.S. Quarterly reporting isn’t the only reason companies stay private, but it’s one of the fixable ones.
There’s a measurable cost to ordinary investors. The Morningstar PitchBook US Modern Market 100 Index, which blends the 90 largest public U.S. companies with 10 major venture-backed private firms, returned 31.3% over one year, compared with 17.4% for our public-only U.S. Market Index. Over a decade: 16% versus 14.7%. Every company that stays private because the cost-benefit calculation for being public doesn’t work is a company most American retirement savers can’t own. At least not at low cost.
It’s true that changing the reporting calendar alone won’t cure short-termism. Our equity research team at Morningstar studied this question closely, and the most consistent finding across markets is that behavior—not the calendar—drives myopic decision-making. Quarterly EPS guidance and incentive structures that reward beating near-term targets are the primary culprits. Ending mandatory quarterlies doesn’t automatically change how executives are paid or how the market judges them. Reforming guidance practices, compensation metrics, and disclosure quality matters more than trimming one or two filings.
Australia offers a model that works. Australian-listed companies report financials twice a year but operate under continuous-disclosure obligations. They must immediately release price-sensitive information as it occurs. Certain early-stage or exploration-type issuers in industries such as biotech, mining, oil and gas are still required to file quarterly cash-flow reports. That’s an elegant, risk-based framework that acknowledges semiannual disclosure is too infrequent for some business models. Investors still win because there’s faster disclosure and enforcement is real: administrative, civil, and criminal sanctions backstop the rules.
If the U.S. moves ahead, design will determine whether investors win or lose. Four design requirements will be decisive.
- Keep investors promptly informed. Clarify materiality thresholds and provide safe harbors for interim disclosures so companies can share operational metrics and plainspoken updates between reports without fear of litigation or enforcement.
- Require quarterlies where risk demands it. Mandate cash-flow, burn-rate, and liquidity reporting for microcaps, pre-revenue firms, and distressed issuers—mirroring Australia and Singapore’s targeted approach.
- Make disclosures useful, not longer. Establish standards—unit economics, retention, order intake, cash conversion—and discourage short-term EPS guidance that perpetuates the very myopia this reform aims to address.
- Enforce it or don’t bother. Meaningful consequences and consistent supervisory follow-through are essential to ensuring continuous disclosure is more than a box-checking exercise.
To be clear about what this shift would and wouldn’t change: companies would still file annual 10-Ks and disclose material events via 8-K filings in real time. Analysis of European markets—where the U.K. and EU moved away from mandatory quarterly reporting more than a decade ago—shows no meaningful difference in valuation or return on equity between companies that report quarterly and those that report semiannually, though research also highlights tradeoffs around liquidity, analyst coverage, and disclosure quality when regimes are poorly designed. The largest companies would likely maintain quarterly updates voluntarily because their investor base expects it. Smaller, less-covered companies—exactly the ones we need in public markets—would gain meaningful cost relief and management bandwidth.
Public markets should be celebrated, not circumnavigated. Whatever makes it easier for more companies to embrace reasonable scrutiny while focusing on long-term value creation is a win for investors—and for the markets that serve them.
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