Quarterly financial reports are a staple of U.S. corporate practice. The SEC requires public companies to report profit, revenue and other figures publicly every three months. The requirement dates to the establishment of the agency in the 1930s Great Depression, as a way to give investors confidence in company information.
Experts have long asserted that the practice of companies publicly forecasting every quarter how they expect earnings to shake out puts too much stress on short-term performance and stock price gains. That can pressure executives to engage in reckless practices to hit quarterly targets or even to manipulate earnings reports. But quarterly reports on results are distinct from the so-called earnings guidance that company executives provide as a forecast.
The SEC in 2016 considered the idea of cutting the quarterly requirement, and signaled that it might do so.
SEC Chairman Jay Clayton said in a statement Friday that the agency “continues to study” the reporting requirement as well as other rules for public companies.