Should we ditch quarterly earnings reports?

Summary

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Podcast Summary: The Indicator from Planet Money

Episode: Should we ditch quarterly earnings reports?

Date: October 21, 2025
Hosts: Waylon Wong and Darian Woods
Special Guest: Rahul Washishta, Professor at Duke University
Additional Voice: Julie Bell Lindsay, CEO of the Center for Audit Quality

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Main Theme & Purpose

This episode explores the ongoing debate around whether U.S. public companies should continue to report their financial earnings every quarter or shift to less frequent disclosures—specifically, twice a year. The hosts and guests examine the history, rationale, benefits, and drawbacks of the current system, drawing on research, regulatory changes, and the perspectives of investors, executives, and policymakers.

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Key Discussion Points & Insights

1. Quarterly Earnings Reports: Origins and Purpose

• [00:12–01:24]

  • Quarterly earnings calls are standard practice for U.S. public companies, providing regular updates to investors.
  • Despite being formulaic, these calls are crucial for market transparency and investment decisions.
  • "This information helps investors make decisions about where to put their money. And if that investor is a company that manages your retirement fund ... then it's your money at stake." – Waylon Wong [01:07]

• [02:55–03:23]

  • The SEC, established in the 1930s, originally required annual reports, later increasing to semiannual, then quarterly in 1970 to prevent companies from concealing poor performance.

2. The Economic Rationale: Why Reporting Matters

• [03:23–04:11]

  • Rahul Washishta: Earnings reports ensure capital flows to the most productive companies, benefiting the entire economy.
    • "It allows for channeling the money to its correct destination ... That's when you make everybody better off." – Rahul Washishta [03:33]

• [04:11–04:34]

  • Financial reports have become more complex, with quarterly filings often exceeding 30 pages and including key disclosures about debt, legal risks, etc.

3. Arguments for Reducing Reporting Frequency

• Cost & Distraction

  • [04:34–04:53]
    • Preparing reports is expensive and time-consuming.
    • President Trump has advocated for semiannual reports, arguing it would save money and allow better management focus.

• Short-Termism Concern

  • [04:53–06:08]

    • Quarterly reports can promote "managerial myopia," discouraging long-term investments and innovation.
      • Rahul Washishta:
        • "When it comes down to most consequential decisions ... the consequences of those kind of choices, they're not going to show up in a quarter or two." [05:02]
        • Firms become reluctant to take actions that benefit the long term if they hurt short-term results.
        • Historical research (1950–1970): As reporting frequency increased, annual capital investment fell by 1.5%.
        • "The evidence ... clearly tells you that as you create these shorter performance measures, the quality of your long term decision making ... declines." – Rahul Washishta [06:08]

  • Sustainability Advocacy

    • [06:20–06:37]
      • Some climate-focused investors believe less frequent reporting encourages companies to prioritize long-term goals like sustainability.

4. Arguments for Maintaining Quarterly Reports

• [06:37–07:12]

  • More information means better decisions for both large and small investors.
  • Quarterly data promotes market confidence and more accurate stock pricing; less frequent reports can increase volatility.

• [07:12–07:44]

  • Julie Bell Lindsay: The SEC may set minimum requirements, but if investors want more frequent disclosure, companies often oblige (as in the UK).
    • "A lot of times what investors want is what companies are going to do ... There's nothing stopping companies from continuing to do that 10Q." – Julie Bell Lindsay [07:30]

5. Potential Compromise: Shorter Updates

• [07:58–08:16]
  • Some firms already issue brief earnings releases before the full report, offering headline numbers quickly.
    • "That is when the market moves ... what is truly important for the investors I think is at the heart of this discussion." – Julie Bell Lindsay [08:16]

6. Regulatory Outlook

• [08:30–08:41]
  • The SEC considered eliminating quarterly reports under the first Trump administration but did not take action.
• [08:41–08:56]
  • Renewed momentum: Chairman Paul Atkins is “fast-tracking” a proposal; possible changes as early as 2026.

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Notable Quotes & Memorable Moments

• Jargon Watch: "Color"

  • Multiple “color” references by Wall Street analysts in earnings calls, humorously highlighted by Darian Woods.
    • "The color just drained from my face right now. Listening to that." – Darian Woods [00:55]

• Practical Reality Check

  • Closing with a playful back-and-forth between hosts and an analyst parodying typical earnings call banter.
    • "Congrats on the nice quarter." – Wall Street Analyst [09:07]
    • "Great episode to you too. It's been a great quarter." – Darian Woods [09:22]

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Timestamps for Important Segments

• Quarterly Earnings Explained: [00:12–01:24]
• SEC History & Purpose: [02:55–03:23]
• Economic Function of Reports: [03:23–04:11]
• Arguments Against Quarterly Reporting: [04:34–06:20]
• Impact on Investment & Long-Term Thinking: [05:02–06:08]
• Investor & Regulatory Perspective: [06:37–07:44]
• Potential Compromise & Market Reactions: [07:58–08:16]
• Regulatory Update: [08:30–08:56]

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Tone & Style

The episode maintains a wry, insightful, and conversational tone, mixing expert analysis with light humor and real-world examples, making the topic both accessible and engaging.

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Conclusion

This episode provides a comprehensive, well-balanced look at the debate over the future of quarterly earnings reports, weighing the needs of corporations, investors, and the broader economy, while highlighting fresh research and imminent regulatory changes. For listeners curious about how information shapes markets and the potential impact of regulatory reform on long-term economic growth, this quick but informative episode hits all the key points.

Transcript

[Rahul Washishta]

Npr.

[Waylon Wong]

It is a time honored tradition in corporate America. Every three months, executives from public companies get on a conference call to talk about how much money they made in the last quarter.

[Darian Woods]

And the calls are all kind of the same. There is hold music.

[Waylon Wong]

Then an operator announces. The call is starting.

[Wall Street Analyst]

Welcome to the conference.

[Darian Woods]

The CEO reads some prepared remarks and.

[Waylon Wong]

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

[Wall Street Analyst]

Yeah, thanks very much, guys. Appreciate all the color as usual.

[Sponsor Voice]

I guess I was hoping for some more color on your.

[Wall Street Analyst]

Just wanted to get a little bit of color there. Just it just seems a little bit. Could you maybe give us some color on that? Thank you.

[Rahul Washishta]

Thank you.

[Darian Woods]

Thanks. The color just drained from my face right now. Listening to that.

[Waylon Wong]

You weren't feeling inspired? No. Ok.

[Darian Woods]

I live for quarterly earnings.

[Waylon Wong]

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.

[Darian Woods]

But how often should companies be reporting their earnings? President Trump is pushing regulators to get rid of quarterly earnings and release them just twice a year. This is the indicator from Planet Money. I'm Darian Woods.

[Waylon Wong]

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.

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[Darian Woods]

The regulator that oversees public companies is called the securities and Exchange Commission or the SEC. It was created in the 1930s and back then generally companies only had to report their earnings once a year.

[Waylon Wong]

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

[Darian Woods]

Rahul Washishta is a professor at the business school at Duke University. He says earnings reports are fundamental to the stock market and the economy as a whole.

[Rahul Washishta]

It allows for channeling the money to its correct destination. And when you can make that happen, that's when you create the maximum amount of wealth in the economy. That's when you make everybody better off.

[Waylon Wong]

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?

[Rahul Washishta]

You know, that's how every investor should think. But in the process of doing that, what you end up doing is something very valuable in the economy when you make sure you are getting the proper return. What you also make sure your money is going to the right firm, which is going to make the best possible investments, create the best possible product and services from which basically everybody benefits.

[Waylon Wong]

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.

[Darian Woods]

And there's a cost associated with all this paperwork. That's one argument in favor of reducing how much companies should be releasing earning. In a social media post last month, President Trump said going down to every six months, quote, will save money and allow managers to focus on properly running their companies.

[Waylon Wong]

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

[Rahul Washishta]

When it comes down to most consequential decisions we make in the corporate world, okay, so think about planning to, you know, expand a new market in China or perhaps some other country, okay? Or perhaps billions of dollars of R and D expenditures you're making to develop a new product or a new technology. Right now, the consequences of those kind of choices, they're not going to show up in a quarter or two.

[Darian Woods]

In other words, these decisions might not bear fruit for years, but in a system of quarterly reporting, managers can get judged based on what happened just in the last three months. Were profits up? Were they down? And this kind of thinking can make Them too focused on quarterly performance.

[Rahul Washishta]

What happens is they might become reluctant to doing what is right for the long run if it hurts the quarterly profits.

[Waylon Wong]

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 Washishta]

So to put it all together, you know the evidence for me it was kind of an eye opener. It really clearly tells you that as you create these shorter performance measures, the quality of your long term decision making that declines.

[Darian Woods]

The desire to encourage more long term thinking has created some strange bedfellows when it comes to potentially cutting back on reports. Some climate focused investors think less frequent reporting could encourage companies to think more long term about sustainability.

[Waylon Wong]

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.

[Darian Woods]

Information, they feel more comfortable making decisions. That typically leads to more trading and that leads to more accurate pricing. There's research showing that stock prices gain get more volatile when there is less frequent reporting.

[Waylon Wong]

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.

[Julie Bell Lindsay]

A lot of times what investors want is what companies are going to do. So there would be nothing stopping companies of institutional investors say that or any investors say that they want the 10Qs. There's nothing stopping companies from continuing to do that 10Q.

[Darian Woods]

By the way, that's jargon for quarterly report. And Julie says that in the UK for example, companies aren't required by regulators to file quarterly reports, but many do because investors ask for that information.

[Waylon Wong]

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.

[Julie Bell Lindsay]

In my view, that is when the market moves. It's when that earnings release hits the market, what is truly moving the markets and what is truly important. For the investors I think is at the heart of this discussion.

[Darian Woods]

The SEC last considered getting rid of quarterly reports during the first Trump administration. The agency got as far as collecting public comment, but the process fizzled out.

[Waylon Wong]

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 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 Cierra Juare. Our editor is Kate Concannon and the indicator is a production of npr.

[Wall Street Analyst]

Thanks. Good morning everybody. Congrats on the nice quarter. Taking the questions. Congrats on the quarter.

[Darian Woods]

And congrats on yet another solid set of results, I think.

[Wall Street Analyst]

Good morning guys.

[Rahul Washishta]

Nice quarter.

[Waylon Wong]

Thanks.

[Wall Street Analyst]

Hey Tony, can you just talk?

[Waylon Wong]

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

[Darian Woods]

Great episode to you too. It's been a great quarter.

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