On May 5, 2026, the Securities and Exchange Commission proposed amendments that would permit U.S. domestic issuers to file financial reports semiannually rather than quarterly. Under the proposal, the choice would rest with the firm alone—that is, with its board of directors. Public investors would have no say. The SEC’s rationale: Halving reporting frequency would cut compliance costs, reduce managerial distraction and short-termism, and perhaps induce more firms to go public.

In a new essay, I take up the broader question the proposal raises: Should regulators ever allow directors to cut a public firm’s previously mandated reporting frequency without investor consent? My answer is no. Public investors should have to approve any reduction. At the IPO, however, a firm should be free to choose whatever reporting frequency regulators permit.

Managers’ incentives around disclosure frequency are structurally distorted. Consider a non-controlled firm—one whose managers can be ousted through a proxy fight or hostile takeover. Cutting reporting frequency can generate indirect benefits for investors: lower compliance costs for the firm, less leakage of competitively sensitive information, and perhaps less managerial distraction and short-termism.

But a cut also imposes direct and indirect costs on investors. They must spend resources estimating the results the firm no longer reports. The information gap between insiders and the market widens—facilitating insider trading and reducing analysts’ incentives to cover the firm. Less frequent reporting also makes managers harder to monitor, weakening the discipline supplied by activist investors and thereby increasing slack.

Here is the problem: Equity-owning directors enjoy the benefits of a cut pro rata, just as investors do, but bear almost none of the costs. Indeed, some of investors’ costs are, for directors, personal benefits. Directors face no value-assessment costs—they know how the firm is doing. Greater information asymmetry lets directors trade more profitably on private information. And weaker monitoring lets them slack off whenever the non-pecuniary payoff exceeds the hit to their shares. All else equal, directors will therefore favor cutting frequency even when it leaves investors worse off and shrinks the pie jointly shared by investors and insiders.  In non-controlled firms, however, fear of ouster by unhappy public investors may sometimes deter directors from cutting reporting frequency.

In controlled firms, where the controller and its appointed directors have nothing to fear from unhappy public investors, that restraint is absent. Thus, the distortion is worse.

My proposed rule is simple: A firm, controlled or not, should not be permitted to reduce its reporting frequency below a previously mandated level unless it obtains approval by a majority of the publicly-held shares voting. A shareholder veto screens out value-destroying reductions in reporting frequency while permitting value-increasing ones. And the cost of a one-time vote is trivial next to annual votes on say-on-pay and shareholder precatory resolutions on matters that are likely far less consequential.

After the SEC’s proposal was released, members of the “Shadow SEC” suggested a precatory shareholder vote. If the SEC cannot compel a binding vote, I’m for a precatory vote—as it can only help. But its value is limited. In non-controlled firms, managers who care about investor sentiment will solicit institutional investors’ views anyway; in controlled firms, managers answer to the controller and can simply ignore the vote.

At IPO, no vote would be needed. Disclosure arrangements adopted before public investors decide what—if anything—to pay for shares cannot expropriate informed investors, who will take into account disclosure arrangements in assessing share value. Because pre-IPO insiders would bear any discount, they have an incentive to pick the frequency that maximizes value. Investors already price single- versus dual-class structures and buy foreign private issuers that report just once a year; pricing reporting frequency for domestic issuers is no harder. Regulators should therefore let firms go public at any frequency down to the regulatory floor, potentially subject to safeguards for offerings aimed at unsophisticated buyers.

My analysis has an important caveat: A firm’s disclosure frequency may well have externality effects on other firms and their investors. I assume that spillover is small enough to ignore.  If it is not, regulators should choose and mandate the socially optimal disclosure frequency, taking into account externalities.

Jesse M. Fried is the William Nelson Cromwell Professor of Law at Harvard Law School. This post is based on his recent paper, “Should Directors Control Reporting Frequency?”, available here.