The U.S. Securities and Exchange Commission is preparing a proposal to remove the requirement that listed companies report quarterly earnings, giving firms the option to publish results twice a year, that's according to a report by the Wall Street Journal.
Public companies in the United States have been required by law to publicly release financial reports to investors and regulators every three months for more than 50 years, but these new rule changes could spark a change that would cut in half the time and expense attached to being a publicly listed company.
Supporters of the move see the deregulatory step as a boon for public markets, to potentially stem the decline in US public listings. It is an impact that's potentially more significant for the small-cap and penny share type companies, which, given the strength of private equity and VC money, and the appetite for early stage start-ups, have been less well suited to being a quoted company than in days gone by.
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The WSJ report claimed a proposal could be published as soon as next month, meanwhile, Reuters reported regulators are discussing with major exchanges how their rules may need to change, with Reuters noting the change could still see quarterly reporting persist, but rather as an optional investor relations step rather than a regulatory one.
Whilst currently speculative, it remains to be seen whether such a proposal does indeed emerge. But, once published, the SEC would follow a public comment period before voting on the final rule change.
The recap
SEC preparing proposal to make quarterly reporting optional
Current rule requires public companies report earnings every 90 days
Proposal could publish next month; comment period at least 30 days