Retail investors largely unaware of SEC semiannual reporting proposal

Investing.com -- Most U.S. retail investors are unfamiliar with a proposal to reduce the frequency of corporate financial reporting, while those aware of the measure are more likely to believe it would weaken transparency, according to a survey conducted by The Motley Fool.

The survey of 2,000 investors, conducted on June 26, found that 44% of respondents had never heard of the proposal, while only 18% said they had heard a lot about it. Among investors who regularly read quarterly earnings reports, 34% said they were unaware of the proposal despite being among those most directly affected.

With only hours remaining before the U.S. Securities and Exchange Commission's deadline of July 6, for public comments on its proposal to allow semiannual reporting, new survey data offers a snapshot of retail investors' views on the measure.

Wall Street's top regulator in May had proposed allowing U.S.-listed companies to replace quarterly earnings reports with semiannual disclosures in a move that would eliminate a 55-year-old requirement for public companies to disclose detailed financial results every quarter, marking one of the biggest changes to U.S. corporate reporting rules in decades. Companies would instead be required to report earnings twice a year.

The proposal has the backing of stock exchanges and some large companies, including JPMorgan Chase, which argue that quarterly reporting imposes significant costs and encourages short-term decision-making. However, the measure is expected to face opposition from investors who contend that less frequent disclosures would reduce market transparency.

The results suggest that while public awareness of the proposal remains limited, investors who have formed an opinion are more likely to view less frequent financial reporting as a risk to transparency and market confidence.

Awareness differed by age. Nearly two-thirds of baby boomer investors said they had never heard of the proposal, compared with 19% of Gen Z investors, meaning 81% of younger respondents had heard at least something about it.

Respondents also expressed concerns about the potential impact on corporate disclosure. Thirty-five percent said the proposal would reduce their confidence in companies' financial transparency, compared with 24% who said it would increase confidence.

Among investors opposed to the proposal, 49% said reporting financial results every six months instead of quarterly would make it easier for companies to conceal financial problems, while 60% said a six-month gap between financial updates was too long.

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