Financial markets are an information battlefield, and for individual investors, it’s not a fair fight. With their superior resources and greater access to company officials, big institutional investors have a large information advantage over the ordinary individual who’s just trying to save for retirement.
One of the most important roles of financial journalism is to help narrow that information gap by uncovering information that’s known to just a few and making it available to everyone. If financial journalists do their job well, they not only make the fight more fair but also make markets more efficient – and that benefits listed companies as well. There is a rich body of evidence from finance research demonstrating that narrowing the information gap by revealing public information tends to increase investor demand – thus reducing a company’s cost of capital.
More information in markets is a good thing, and that’s why the reported move by the Securities and Exchange Commission to end required quarterly reporting by U.S.-listed companies is a bad idea. There are many reasons why the U.S. boasts the world’s deepest and most liquid capital markets, and the trove of information that U.S.-listed companies must release every three months is one of them. Financial journalists rely on this regular disclosure to give their wide audience a clear picture of company performance and help inform investment decisions. Looking again at finance research, there’s compelling evidence that publication of financial news – which is far more accessible to the average individual than proprietary research – improves the overall information environment in markets. Less frequent company disclosure makes it more difficult for journalists to inform their audience, and increases the information gap. A 2023 study in Management Science demonstrated that information asymmetry, measured as a component of the bid-ask spread on individual shares, rises steadily in between reporting periods – the longer the time between reports, the more that asymmetry will grow. And as corporate executives tend to be more available for interviews around earnings reports, a move to less frequent reporting could also reduce journalists’ access to company insiders.
To be sure, there are arguments in favor of scrapping the quarterly reporting requirement, especially for smaller companies. After all, half-yearly reporting is common in Europe and Asia, although some companies in those regions voluntarily produce quarterly reports. Compiling a full set of financial statements is time-consuming and costly – U.S. companies could save money if they only had to do this twice a year. The SEC estimates it takes an average of 135 hours to complete a quarterly filing, and Nasdaq suggests moving to semiannual reporting would reduce the overall filing burden by about half.
While the cost-savings argument seems compelling, large U.S.-listed companies can probably afford it, especially because for them the around $5 million they pay in annual compliance costs is a drop in the bucket. According to FactSet, net profit margin for S&P 500 companies in the third quarter of 2025 was 13.1%, “the highest net profit margin reported by the S&P 500 going back to at least 2009.” Smaller companies are in a tougher spot, even with lower compliance costs of around $1.5 million, and easing disclosure standards on cash-strapped small-cap companies might make sense: many of them are unprofitable. As of Sept. 2024, 42% of the companies in the Russell 2000 index were losing money.
There’s also a theory that quarterly reporting encourages “short-termism” among company management, although it’s not clear whether another three months between reporting periods would make much difference. Some of the strongest evidence for the link between more frequent reporting and “managerial myopia” comes from a 2018 study in The Accounting Review, but that study was based on data from 1950-1970. A larger factor in short-term thinking is likely the incentive structure for CEOs, most of whose compensation comes from stock-based awards instead of salary.
The current “profit gap” between large and small companies itself is a cause for concern, as it’s being driven by the market dominance of the biggest U.S. companies, notably the tech-focused “Magnificent Seven”: Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia and Tesla. Those seven shares accounted for 44% of the S&P 500’s earnings growth in the year ended Sept. 30, 2025, and 54% of the index’s price gain, according to data from Capital IQ and First Trust Advisors.
These are exactly the firms that merit more careful monitoring, not less. First of all, their performance hasn’t been all that magnificent in the first three months of 2026: they have underperformed the broader market. More importantly, the vast majority of their assets are intangible things like patents, trade secrets, brand value and the premium paid to acquire other companies (i.e. goodwill). The World Intellectual Property Organization estimates that intangible assets at the top 15 U.S. companies, including all of the Magnificent Seven, account for around 90% of the companies’ enterprise value, a measure of market capitalization that includes total debt but excludes cash-on-hand. Assets like these, which lack physical form and a market to trade them on, are notoriously difficult to value accurately.
And most importantly, these shares are difficult for ordinary investors to avoid: as of the end of 2025, the Magnificent Seven shares represented fully 34% of the S&P 500 index, meaning even investors in passively managed S&P index funds have a heavy exposure to them – whether they realize it or not.
