Few empirical studies end up on both sides of a major regulatory fight, and fewer still get accused of being read too selectively by one side. My 2021 study on Israel’s voluntary transition to semiannual reporting has been at the center of exactly that dispute.

The SEC’s proposal to let eligible companies replace quarterly Form 10-Q filings with semiannual Form 10-S filings cites the study’s finding that firms adopting semiannual reporting see meaningful reductions in audit effort and audit fees.[1] Shadow SEC Statement No. 8, published June 1, 2026 by a group of prominent corporate and securities law scholars, pushed back, arguing that the commission’s proposal cherry-picked the evidence.[2] The statement, along with a subsequent comment letter published on the Harvard Law School Forum on Corporate Governance, pointed to the study’s other central finding: Firms that adopt the relief also show lower corporate-governance quality and reduced external audit effort, which the study itself describes as creating heightened information-asymmetry risk for investors.[3]

Both sides, in other words, are reading the same paper. Neither has asked the question that sits underneath both readings: What shapes the judgment of the directors who actually decide whether to make the switch? Both camps have quietly relied on the same assumption, that directors evaluate reporting frequency purely as neutral fiduciaries acting on behalf of shareholders. Neither side has examined that assumption systematically.

The Evidence

The Israeli natural experiment documented three findings (Bar-Hava, 2021). Firms that voluntarily adopted semiannual reporting saw meaningful reductions in audit effort and audit fees; less frequent reporting genuinely lowers governance-related costs. Investors reacted negatively to the switch, while firms that chose to keep quarterly reporting were rewarded with increases in their share prices. And the firms that stayed quarterly had stronger governance to begin with.

Collectively, these findings suggest that the decision to adopt semiannual reporting is not merely a disclosure decision. It is also a governance decision.

These results have mostly been read two ways: cost savings on one side, investor protection on the other. In both accounts, the board’s decision functions as a black box: Empirical evidence enters, a disclosure choice emerges, yet the governance process that connects the two remains largely invisible. We observe the outcome but know remarkably little about how directors weigh competing governance, legal, economic, and personal considerations before deciding whether investors should receive less information.

The Missing Dimension

Corporate governance research increasingly complicates that picture. Earlier work found that independent directors frequently do not disclose the true reasons behind their resignations, even when governance disagreements are involved (Bar-Hava, Huang, Segal & Segal, 2018). Granov and Eckstein (2025), analyzing more than 54,000 Form 8-K filings, found that outspoken resignations, cases where a departing director actually names the conflict, account for roughly 0.1% of disclosed departures among S&P 500 companies. They trace this near-total silence to fiduciary liability risk, reputational concerns in the director labor market, and the structural incentives of board culture.

Directors also respond to organizational and financial incentives. Adams and Ferreira (2008) demonstrate that even relatively modest payments for attending meetings improve director attendance, suggesting that directors respond to financial incentives embedded in board governance. Quarterly reporting requires more board meetings, more audit committee activity, and more contact with external auditors than semiannual reporting does. A shift in reporting frequency is therefore also a shift in directors’ workload, visibility, and, in companies that pay by the meeting, compensation.

Jesse Fried (2026) also focuses on director incentives, but his argument points in a different direction. He argues that directors may choose to reduce reporting frequency even when doing so makes public investors worse off, because they share in the benefits of reduced reporting while bearing little, if any, of the resulting costs. He therefore proposes requiring public shareholder approval before a company can switch.

Fried identifies an important incentive that may push directors toward less frequent reporting. But it is only one part of a broader incentive structure. Directors may also face financial, organizational, reputational, and governance considerations that operate in the opposite direction. Quarterly reporting, for example, requires greater board and audit committee involvement, more interaction with management and external auditors, and, where director compensation combines a fixed component with fees tied to board or committee meetings, potentially greater compensation. Research shows that directors respond to meeting-based financial incentives. The relevant question, therefore, is not whether directors have incentives, but which incentives matter, how they interact, and in which direction they ultimately shape reporting-frequency preferences.

This suggests that disclosure policy may involve a second-order agency problem. Traditional corporate governance focuses on conflicts between managers and shareholders. Here, however, the relevant question is whether directors’ own incentives influence decisions about the amount of information ultimately reaching shareholders.

A Governance-Based Disclosure Framework

Fried responds to the potential incentive problem by moving the decision away from the board. An alternative approach is to keep the decision with the board while making its reasoning observable. If a company is permitted to reduce reporting frequency, its board should be required to disclose the governance process behind that choice, not just the outcome. That could include whether the audit committee recommended the change, whether the board considered the likely effects on market transparency, liquidity, and governance quality, and how directors concluded that less-frequent reporting remained consistent with their fiduciary duties. The disclosure might also explain whether alternative approaches were considered, whether outside advice was obtained, and how the board balanced cost reductions against transparency, liquidity, governance quality, and investor protection.

This would not eliminate regulatory flexibility, and it would not presume misconduct. It would simply extend a principle that disclosure regulation already applies to companies—investors deserve to see how a decision was reached, not only what was decided in the boardroom.

Why This Matters

Corporate governance scholarship has spent decades studying management incentives: executive compensation, empire-building, short-termism. It has spent comparatively little effort studying whether directors’ own incentives shape the disclosure choices they are asked to make on shareholders’ behalf. That gap is easy to overlook precisely because boards are supposed to be the solution to agency problems, not a source of one.

The SEC’s semiannual reporting proposal is a natural place to close that gap, because it puts the question in sharp relief: It asks boards to decide, on behalf of investors, how much information those investors will receive. Future research should examine whether board compensation correlates with disclosure preferences, whether litigation exposure shapes willingness to reduce transparency, and whether these relationships vary with governance quality. These questions have clear regulatory stakes and, so far, little empirical evidence to answer them.

Disclosure regulation has traditionally focused on the transparency of companies. The SEC’s proposal suggests that the next frontier may be the transparency of board decision-making itself.

If regulators permit companies to disclose less often, they should require boards to disclose more about how and why the decision to do so was made.

ENDNOTES

[1]: SEC proposal to allow companies to file semiannual reports on new Form 10-S in lieu of quarterly Form 10-Q filings, discussed in Shadow SEC Statement No. 8, June 1, 2026, https://clsbluesky.law.columbia.edu/2026/06/01/shadow-sec-statement-no-8-comment-on-sec-proposal-to-allow-companies-to-file-semiannual-reports-on-new-form-10-s-in-lieu-of-quarterly-form-10-q-filings/.

[2]: Shadow SEC Statement No. 8 (June 1, 2026), id.

[3]: Comment Letter on the SEC’s Proposal to Replace Quarterly Reporting with Semiannual Reporting, Harvard Law School Forum on Corporate Governance (July 9, 2026), https://corpgov.law.harvard.edu/2026/07/09/comment-letter-on-the-secs-proposal-to-replace-quarterly-reporting-with-semiannual-reporting-2/, quoting Keren Bar-Hava, Switching to Semi-annual Financial Statement Reports — Market Reaction, Audit Fee and Corporate Governance Quality 249 (July 12, 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4889438.

REFERENCES

• Adams, R. B., & Ferreira, D. (2008). Do Directors Perform for Pay? Journal of Accounting and Economics, 46(1), 154–171.
• Bar-Hava, K. (2021). Switching to Semi-annual Financial Statement Reports: Market Reaction, Audit Fee and Corporate Governance Quality. Journal of Finance and Accounting, 9(6), 249–257.
• Bar-Hava, K., Huang, S., Segal, B., & Segal, D. (2018). Do Independent Directors Tell the Truth, the Whole Truth, and Nothing but the Truth When They Resign? Journal of Accounting, Auditing & Finance.
• Fried, J. (2026). Quarterly vs. Semiannual Reporting: Why Public Shareholders Should Decide.
• Granov, Z., & Eckstein, A. (2025). The Sound of Silence in Corporate Director Resignations. Washington and Lee Law Review, 82, 1–85.

Keren Bar-Hava is head of the Department of Accounting at the Hebrew University Business School.