Those calling for an end to quarterly earnings reports argue that the change will help companies focus on long-term goals rather than short-term priorities.
But the focus on short-termism does not come from reporting requirements. It comes from investors and analysts who monitor company performance in real time and use continuous data, private engagement, and proxy influence to make decisions long before results are released. With or without quarterly reporting, companies need to focus on establishing and maintaining a compelling value story, a comprehensive stock story based on market positioning, a value creation plan, and management accountability if they want to escape the short-term trap.
For most executives, quarterly reports still serve a purpose. They provide structure, provide moments of clarity to explain performance, clarify strategy, and manage expectations in an ever-present market. Ending that process may free up company resources, but it also takes away one of the few tools management has to deal with investor pressure.
This is not to say that the current system is efficient. Preparing quarterly reports consumes an enormous amount of time and resources, something Fortune 500 leaders criticize. Reporting begins in just six weeks from each new quarter and continues nearly into the next quarter, taking the entire team months at a time.
Finance teams spend almost all of their time looking backwards instead of thinking ahead about strategy, planning, risk modeling, and proactive financial analysis to actually build long-term value. Constantly preparing to report what has already happened leaves less bandwidth for analyzing what will happen and for identifying vulnerabilities that activists have already calculated.
A European “natural experiment” in which listed companies were divided into quarterly and semi-annual reporting provided a real-world reference point for the effects of reporting frequency. At the end of the day, there are no significant differences in valuations or long-term performance between companies that report quarterly and those that report semi-annually. Even in sectors that dominate earnings season, reducing reporting frequency does not increase multiples, and many companies still choose to report quarterly to increase investor attention and liquidity.
In fact, the bigger challenge facing companies today is the constant pressure from investors, proxies, and activists that exists independently of regular reporting cycles and frequency. Institutional investors meet privately with management teams throughout the year, often gaining insights that influence trading and engagement strategies in ways not available in public reports. These private meetings are completely independent of public submission schedules and create an informational advantage that drives portfolio adjustments within days or weeks.
A small number of proxy advisory firms that dominate the market can sway shareholder votes on important matters by double-digit margins. As a result, companies are treating these companies as quasi-regulators, testing important decisions against their own policies before finalizing them. Management teams spend months anticipating these recommendations and adjusting governance changes to continually evolving standards, rather than quarterly.
Activist campaigns are separated from reporting calendars and run based on their own data and their own timelines. For example, recent activist campaigns in the transportation and retail industries began within weeks of stakeholder announcements and were followed by leadership changes less than two months later. Quarterly disclosures are not what drives these campaigns. Instead, we analyze the locked-in value throughout the year. Activists identify targets by comparing companies to their peers on various dimensions such as stock price performance, profit margins, and capital allocation efficiency.
Consider that a typical company facing an activist campaign has underperformed the market by more than 10% in the year leading up to this announcement. Patterns such as declining profit margins relative to competitors, underutilized assets, or strategic deviations that suggest management is not maximizing value can signal opportunities. This work is done continuously using real-time data and proprietary models, rather than waiting for applications. Therefore, as long as companies provide regular financial data on a consistent basis, activists can identify vulnerabilities and bring legal action.
These companies also treat investor relations as a strategic and ongoing discipline, building credibility before problems arise and engaging with shareholders throughout the year, not just during voting periods or earnings calls. Investors don't necessarily want more frequent reporting. They want clarity, context, and consistency. A clear statement of value in a well-timed editorial or media appearance can increase a company's investor confidence more than a single report, and can help companies avoid speculation that could erode value.
Quarterly reports become part of an ongoing investor relations effort, giving leaders an opportunity to frame results, provide forward-looking context, and strengthen confidence in the vision. In an era where 20% of stock price movement can be attributed to tone and message, not just financials, the ability to tell that story directly to the market is critical. In practice, this could mean consolidating the annual report and first quarter update into a single semi-annual report, or shortening the formal cycle, while maintaining detailed performance updates through a digital investor portal. Simplifying processes could potentially free up time for deeper strategic work (risk modeling, scenario planning, shareholder engagement) while maintaining the communication cadence that investors rely on.
Treating investor engagement as a strategic function allows management to refocus the entire stock story and communicate long-term value creation, rather than constantly reacting to short-term pressures. Management teams will be differentiated if they can balance competing pressures and requirements while maintaining a strong, clear and concise company story.
