The end of quarterly reporting in the US has received the backing of a major not-for-profit that campaigns for long-term investments.

FCLTGlobal, whose membership includes both companies and investors, has come out in favour of a move to six-monthly reporting in contrast to other investor bodies, such as the International Corporate Governance Network (ICGN).

Commentary sent by FCLT chief executive Sarah Keohane Williamson to regulators at the Securities and Exchange Commission (SEC), says: “The proposal reflects a well-grounded recognition that the existing quarterly mandate imposes structural costs on long-term investment and that a one-sized-fits-all approach does not serve all companies or investors equally.”

It argues elsewhere in its response to the SEC that its own research finds that 88% of executives “agree” that operating with longer time horizons would support better financial performance.

“The quarterly cycle in the United States reinforces a systematic bias toward short-term decision-making that is costly to companies, investors and the broader economy.”

And: “Quarterly reporting creates a cadence that organises management attention, investor expectations and media coverage around three-month intervals.”

Divisive issue

Experts anticipated a hotly fought debate in the US over quarterly reporting. Last week, the ICGN made its views felt in its own consultation response, working through the risks, such as “volatility” that can cause “excessive swings in stock prices” and arguing that other markets have failed to gain “better valuation, better capital raising or a healthier IPO market” as a result of moving away from performance disclosures four times year.

ICGN’s Jen Sisson wrote that the evidence “does not demonstrate” that quarterly reporting is a significant factor in the decision to list.

“We are not supportive of the proposal to allow companies to voluntarily report on a semiannual basis and recommend that the current quarterly reporting requirements be maintained,” she said.

Reforms to the frequency of US company reporting were set in train by comments from US president Donald Trump, made soon after he took office.

SEC chair Paul Atkins has argued that doing away with quarterly reporting would give companies “increased regulatory flexibility”, while adding that the “rigidity” of mandatory quarterly reporting has “prevented companies and their investors from determining for themselves the interim reporting frequency that best serves their business needs.”

In a speech last week, Atkins made clear his broader view of the current US disclosure framework in the context of declining IPO numbers, continuing the White House theme that companies are over regulated.

“Years of accretive rulemakings—some eliciting immaterial information—have produced reams of paperwork that can do more to obscure than to illuminate,” he said.

He added disclosures had been “weaponised” for “social and political agendas that stray far from the SEC’s mission”.