Should we ditch quarterly earnings reports?

There is hold music, then an operator announces. The call is starting.

And then executives take questions from Wall street analysts. The questions usually sound something like this.

You weren't feeling inspired? No. Ok.

It's not the most riveting stuff, but companies talking about their financial results is important for the stock market. This information helps investors make decisions about where to put their money. And if that investor is a company that manages your retirement fund, for example, then it's your money at stake.

And I'm Waylon Wong. There is evidence that less frequent reporting can be better in the long run for companies and their shareholders. But there are also trade offs. Today on the show, we give you some color on this ongoing debate.

The SEC bumped up the requirement to twice a year in the 50s, and then it started requiring quarterly earnings reports in 1970. This was in response to some companies that were hiding poor financial performance from their investors.

And when you talk about, I want to make sure my money's going to the right place, are we really talking about I want to make sure that I'm making the maximum amount of money on my investment?

So to hear Rahul explain it, there's a lot riding on these earnings reports. Over time, these financial filings have also gotten more detailed. Rahul says that decades ago, an annual report might be just 15 pages long. Today, a quarterly report is typically double that length or more. It covers stuff like how much debt companies have and are they involved in any lawsuits that might affect their bottom line.

Another concern about quarterly reports is short term thinking. Rahul calls it managerial myopia. And he explains it this way when

Rahul and some colleagues studied what happened when public companies in the US Went from annual to semiannual to quarterly reports. This is over a 20 year stretch from 1950 to 1970. The researchers found that as companies increased their reporting frequency, they pulled back their spending. Annual capital investment fell by around 1.5%.

Rahul says he likes the idea of moving from quarterly to semiannual reports, but there is also evidence to support keeping the current cadence. One big argument in favor of quarterly reports is that more information benefits investors. Whether it's a huge pension fund or an everyday person with an account on a platform like Robinhood, when investors have

Julie Bell Lindsay is really familiar with all of the filings that companies have to make with the sec. She's the CEO of the center for Audit Quality. It's a professional association representing the people who audit public companies. And Julie says one important thing to consider is what investors want.

There's another potential option here, and that is continuing to report quarterly results, but in a shorter format than what's required by the sec. Many public companies in the US Already do this. They put out a shorter earnings release with some headline numbers before they file their more detailed report with regulators.

and now it's been restarted under the Trump administration's new leadership. At the sec, Chairman Paul Atkins said last month that the agency is facing fast tracking the process and could have a fresh proposal by early 2026. This episode was produced by Julia Richie and engineered by Jimmy Keeley. It was fact checked by Sierra Juarez. Our editor is Kate Concannon. And the indicator is a production of npr.

Darian, I'd just like to say great episode. Congrats.