Key Finding
Directors have incentives to reduce financial reporting frequency even when it harms investors, suggesting that shareholder approval should be required for such changes after a firm goes public
Abstract
This essay considers whether regulators should let directors control a public firm’s reporting frequency. It is prompted by the May 2026 SEC proposal to permit directors of domestic issuers to file financial reports semiannually rather than quarterly. I show that directors of non-controlled firms may cut reporting frequency even when it makes investors worse off: they reap the same benefits pro rata but bear little if any of the costs. In fact, some investor costs translate into director benefits. In controlled firms the distortion is worse. Public investors should therefore have to approve any reduction. But at IPO a firm should be free to choose the reporting frequency it prefers, potentially subject to safeguards.
