The US is considering moving to a semi-annual reporting system for public companies. There’s been a lot of speculation about what will happen if the US eliminates mandatory quarterly reporting, but based on his own country’s experience in scrapping mandatory quarterly reporting, this article from a Swedish financial regulator suggests that the answer might just be nothing:

[I]n 2014 the mandatory requirement was scrapped, in part because coming EU-regulations made it difficult to have quarterly reports mandatory. Also, the debate at that time, a period with very few IPO’s, was that the regulatory burden kept small companies from being listed. The mandatory quarterly requirement therefore had to go.

Trading statement

The half-year report was still mandatory, since Swedish companies are following IFRS. NASDAQ Stockholm also kept a requirement for the companies to issue a full-year (quarterly-like) report within two months of the final day of the year, because the annual report normally arrives late, after approximately four months. Consequently, the first and the third quarter report became voluntary. Companies only had to present a trading statement with very few numbers. However, they had to explain why this report was more useful to investors, than a comprehensive quarterly report.

Absolutely nothing

What happened? Nothing, absolutely nothing. Some companies, very few, changed the name of the Q1 and Q3 report to “quarterly statement”, but in essence the information was the same. (Footnote: The last ten years NASDAQ Stockholm and the unregulated markets in Sweden has been one of the most expansive IPO-markets in the world, so obviously quarterly reporting was not a limitation).

Although it’s a stretch to assume that US public companies will go the way of Sweden’s if mandatory quarterly reporting is eliminated, my guess is that investors will reward those who do continue to provide a steady flow of quarterly information, and that some of the potential downsides to reporting on a semi-annual basis may further encourage many companies to maintain the status quo.

– John Jenkins