The Securities and Exchange Commission's
Earlier this month, SEC chairman Paul Atkins floated a
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"There's benefits to companies that will be filing like lower compliance costs," said Ro Sokhi, a partner at UHY. "The idea is that companies will be able to focus on long-term strategic growth, rather than this quarterly cadence."
"It's optional, so companies will still have the option to do quarterly filings," he added. "Many companies may not even take the option, and then the other thing is that companies do start to take the option because it's just cheaper to do so. Compliance costs and overheads are lower."
The proposal has a good chance of passing as there are three Republicans on the commission right now, and no Democrats. "At least two of the three have expressed a strong desire to move from quarterly to semiannual reporting, so I would be surprised if it did not go through in some shape or form," said Laura Posner, a senior member of the law firm Cohen Milstein's securities litigation and investor protection practice, who previously served as bureau chief for the New Jersey Bureau of Securities. "Quite frankly, I think their rulemaking proposal is likely pro forma, and I don't think they will care what folks say, but I could be mistaken."
She believes the proposal will spark objections from various groups. "Pretty consistently, most investors in the market think this is a very bad idea," she added. "I don't know that this SEC cares too much about that, because they seem to only be focused on what they think companies want. And I'm not even sure that this is something that most upstanding companies want either."
She sees little demand from investors as well. "I think with most proposals that have been coming out of the SEC, or changes that are made without any investor input or rulemaking from this SEC, they are solutions in search of a problem," said Posner. "I don't think there is any clamoring by investors or corporations to move from quarterly reporting to semiannual reporting. I don't think there's any evidence to suggest that doing so is good for the market, or that it will lead to more offerings. Companies who are already reporting, first of all, are already public. In terms of companies not going public because they don't want to have to do quarterly reporting, there is no evidence to suggest that's why companies don't go public."
She also sees contradictions in the SEC's approach. "It's contrary to a lot of the moves that the SEC is making that will discourage companies from going public, including opening up private investment to retail investors," said Posner. "I don't even know what they're trying to accomplish. But the economic evidence is quite clear that to the extent there is an issue with companies going public, it is not due to the relatively small compliance costs associated with being public or the threat of litigation, which is the other boogeyman that Chair Atkins likes to cite. It has to do with factors well beyond those two issues, so I think rule changes like this do not accomplish the purported goal of the chair."
Atkins has said one of his goals as SEC chair is to "make IPOs great again" and sometimes wears a red baseball cap with that saying emblazoned on it.
"I'm not necessarily seeing the linkage between less frequent interim filings and a robust IPO market," said Sokhi. "I think there are other reasons why the IPO market has slowed down in 2025 and continues to be slow in 2026. It's probably more to do with structural items like tariffs and the Iran war or volatility in general that companies are just finding that there is no open IPO window."
The SEC's rules around quarterly filing don't typically drive a company's decision about doing an IPO, he pointed out.
"Investors won't have access to timely reporting," he added. "If reporting comes out six months later, there could be costs in the volatility that comes around because investors haven't seen what the numbers look like, and all of a sudden there's a significant change, either positive or negative."
Paul B.W. Miller, an emeritus professor of accounting at the University of Colorado in Colorado Springs views the proposal as "
Competitive advantages
The change could also eliminate a competitive advantage of the U.S. markets.
"This SEC is talking about problems with Chinese companies and concerns about the transparency of their filings, including on U.S. markets, yet somehow you think providing less transparency and less regulation is going to make you competitive with these markets that you find problematic," said Posner. "I truly don't understand the rationale, even if it were to make us more competitive, but I don't think we are losing competitive pressure to Chinese markets. I think when you take away what makes the U.S. market the most attractive in the world, which is a disclosure-based regime with transparency, with the ability to sue when you are defrauded, when you have an active regulator that goes after companies who act inappropriately, that is what attracts investors to our market. Going to the lowest common denominator makes us just one of any other number of markets that investors are wary of investing in because of those heightened risks. I don't see that as being a reasonable rationale for those kinds of changes."
She also foresees problems for accountants and auditors.
"I think the problems that are going to befall investors are going to be problematic for the accountants too," said Posner. "They're going to have, in certain respects, less visibility into what's going on at the company. They are going to be getting less information from the company. They are going to have to deal with greater volatility and more surprises. Right now, you have a situation in which a company has to, at least on a quarterly basis, provide some basic information to the market and to accountants, and instead, they're going to be able to hold that for six months at a time. Quite frankly, if I were an auditor, that would make me much more concerned. It would make the work that I have to do for either the semi-annual report or the annual report much more difficult because there's just so much more information that has to be understood and digested."
The proposed changes aren't likely to save on accounting or auditing fees either. "I don't see this as saving money," said Posner. "I think the accountants are going to be having to do the same work over long periods of time, because they're not going to have the benefit of those quarterly [reports]. Even though they're not providing an audit report with the quarterly reports they are still in there doing work each quarter, so I don't see it as helpful for them. I actually think it will probably be more difficult for them. I don't see it as costing the company any less, with regard to the accountants, than before. If anything, I could see it increasing costs."
Accounting standards
Atkins has also
On the audit side, he also foresees changes when it comes to semiannual reporting on the new Form 10-S. "The financial statements within are likely to be very similar to what they would be under the old rules if the company were filing a 10-K," said Sokhi. "If they go down this optional path of doing semiannual filings, they may find that investors are hyperfocused on those semiannual filings, and there's more scrutiny on them. Management teams, including CFOs and FP&A, could find that they just need to provide more discussion and analysis in the MD&A to bridge the gap essentially as to what's been happening for the past six months. Management may just find that we're putting more energy into a semiannual filing anyway, so the cost per report ends up going back up a little bit. Some of that perceived lower compliance burden just may be offset by just thinking about all this additional work that goes into preparing a semiannual filing, but the actual updates would probably be very similar."
Insider trading risk
Posner sees issues potentially with the risk of insider trading, which she noted is not typically the focus of accountants. "To a certain extent, they do have certain responsibilities with regard to ensuring sufficient internal controls," she added. "I don't think a switch to semiannual reporting decreases insider trading. I think it increases insider trading, and therefore puts more onus on the accountants in terms of the compliance oversight there."
Accountants might also be affected by the proposed rules allowing a company to switch back and forth between quarterly and semiannual reporting, and to make that election after they know their first-quarter results. Posner sees that as problematic for insider trading reasons and others as well.
"I imagine for an accountant or an audit firm trying to plan, having a company that can switch back and forth is problematic and makes it very difficult for them to do their work, to plan their audit, to ensure that they have time to get the information they need, to do a proper audit, and to ensure that they're doing the correct comparisons year to year, quarter to quarter, particularly in industries that are very cyclical in nature."
She noted that the retail industry, for example, usually receives many of its sales in the fourth quarter because of the holidays. "When you're not necessarily comparing 2025 Q4 to 2026 Q4 but maybe you're comparing a semiannual report to a quarterly report, that makes it very difficult, not only for investors, but for the auditor to do his job correctly."
