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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is CEO of Norges Bank Investment Management
The quarterly earnings dance is a familiar ritual in corporate life. Every three months, companies worldwide devote considerable resources to preparing detailed financial reports. This enterprise can be distracting for management, leading them to focus on short-term results at the expense of long-term value creation. As chief executive of one of the world’s largest investment funds, I believe it’s time to question whether quarterly reporting truly serves the best interests of companies, investors and the broader economy.
Our own experience suggests that a reduction in reporting volume can be beneficial. Since moving from quarterly to semi-annual reports, we have found ourselves better positioned to focus on what truly matters: long-term strategy and sustainable value creation. This isn’t just about saving time and resources — it’s about fundamentally changing how businesses think and operate.
The arguments supporting less frequent reporting are compelling. Major markets including the EU, UK and Singapore have already moved away from mandatory quarterly reporting for all companies. According to a study published by SGX, the Singapore exchange, the shift in requirements benefits companies by reducing compliance costs and alleviating pressure.
This gives companies breathing room to focus on strategic planning and long-term investments.
This is particularly crucial for industries that will drive future economic growth and the transition to clean energy. Take fast-growing sectors like computer chips, cloud computing and biopharma. These industries need to invest heavily in research and development to create breakthrough products. Research by McKinsey shows that these high-growth sectors spend twice as much on R&D as other industries. To develop innovations successfully, companies need the freedom to make long-term investments without the pressure of hitting quarterly profit targets.
Critics argue that reducing reporting frequency might lead to market volatility or uneven access to information. However, experience shows these concerns can be addressed through robust continuous disclosure obligations and high-quality semi-annual reports. Companies will still report important news immediately.
The current system isn’t just burdensome — it’s potentially damaging to market dynamism. Over the past three decades, major equity markets, including the US, have experienced a 40 per cent or greater reduction in the number of public companies. The high regulatory reporting burden could be one factor driving companies to stay private for longer or avoid public markets altogether.
For smaller companies and start-ups, these reporting requirements are particularly heavy. By reducing them, we could make public markets more accessible to new companies, allowing them to access the capital they need earlier in their development while also giving retail investors more opportunities to participate in their success.
As a long-term investor, we’re not advocating for less transparency. Rather, we’re calling for a more thoughtful approach to corporate reporting that encourages companies to focus on sustainable value creation. This means fewer but higher-quality reports that provide genuine insight into a company’s strategy and prospects.
The quarterly report treadmill has become a habit, but habits can change. Just as Norges Bank Investment Management has benefited from reducing reporting frequency, I believe companies, investors and the broader economy would benefit from a similar shift. It’s time to move beyond the constraints of quarterly reporting and create an environment where long-term thinking can flourish.
