A regulatory change decades in the making may finally be approaching — and for small and microcap public companies, the implications could be significant.
The Securities and Exchange Commission is preparing a proposal that would make quarterly earnings reporting optional, allowing public companies to instead report financial results twice per year. The proposal, which could be published as early as April, is currently in discussions between the SEC and major stock exchanges regarding how listing rules would need to adjust. Once published, it will enter a public comment period of at least 30 days before the SEC votes on the rule.
SEC Chairman Paul Atkins and President Donald Trump have both voiced support for the shift. Trump first raised the idea during his first term in 2018, arguing that semiannual reporting would reduce short-term thinking and cut the administrative costs burdening public companies. That argument has only gained traction since. The quarterly treadmill — preparing financial statements, coordinating with auditors, hosting earnings calls — runs on a near-constant cycle for CFOs at small public companies, consuming resources that lean teams at microcap firms can ill afford.
For larger companies with dedicated investor relations departments and deep finance teams, quarterly reporting is manageable. For a $200 million market cap company with 50 employees, it can feel like a full-time job. Supporters of the proposed change argue this compliance burden is one of the key reasons why many companies choose to stay private longer — or simply never go public at all. A semiannual reporting structure could lower the bar to entry for the public markets and broaden the investable universe of small and microcap stocks.
The EU and the UK both moved to semiannual mandatory reporting roughly a decade ago. Notably, many companies in both markets continued reporting quarterly by choice — suggesting the market itself can enforce disclosure standards even without a regulatory mandate. That precedent is likely to be a central argument for U.S. adoption.
The opposition is real, however. Critics argue that less frequent disclosures reduce market transparency, create wider informational gaps between company insiders and retail investors, and could increase volatility around the two annual reporting windows. For microcap stocks — where information asymmetry is already higher and trading volumes are lower — a six-month gap between financial updates raises legitimate concerns about price discovery.
There’s also the question of what “optional” really means in practice. Institutional investors and analysts who cover microcap names expect regular data. Companies that choose semiannual reporting may find themselves at a disadvantage in terms of analyst coverage and institutional interest, particularly if peers in the same sector continue reporting quarterly. In other words, the market may continue enforcing the quarterly standard even if the SEC doesn’t.
What’s clear is that this proposal has direct implications for the small and microcap space — more so than for any other segment of the public markets. The cost-benefit calculation is most acute at smaller companies, and the potential to attract more issuers to the public markets is a legitimate upside worth monitoring.
The SEC’s formal proposal is expected to follow soon. For issuers, investors, and advisors in the small and microcap space, the comment period will be the time to shape what this change actually looks like in practice.
