If The SEC Scraps Quarterly Reporting, Will IPOs In The US Become More Attractive Or More Risky?

The US Securities and Exchange Commission (SEC) is reportedly preparing a proposal to eliminate mandatory quarterly reporting for public companies, a move that many expect could significantly reshape how businesses approach the public markets.

According to Reuters and The Wall Street Journal, the change would reduce the frequency of required financial disclosures, potentially shifting the balance between transparency and flexibility for listed firms.

But for startups and scaleups weighing an IPO, the implications are far from straightforward.

Will This Lower the Barrier To Going Public?

On the surface, reducing reporting requirements could definitely make public markets more appealing – particularly for high-growth startups already wary of the regulatory burden that comes with listing.

Dr. Yu Zhang, Assistant Professor of Accountancy at UCD Michael Smurfit Graduate Business School, points to historical precedent. She told TechRound that”for private firms considering an IPO, that lower burden is genuinely relevant. There is evidence that disclosure and compliance costs affect the go-public decision: research on the JOBS Act found that easing disclosure burdens increased IPO activity. In that sense, reducing required reporting frequency would likely make going public more attractive, especially for smaller, growth-oriented, R&D-heavy, or competitively sensitive companies that dislike revealing too much too often.”

Indeed, for founders building in competitive or fast-moving sectors like AI or deep tech, fewer mandatory disclosures could reduce the risk of exposing sensitive information too frequently. It may also ease operational pressure, allowing teams to focus on product and growth rather than constant reporting cycles.

But, importantly, that’s only one side of the story.

The Transparency Trade-Off

It’s important to bear in mind that less frequent reporting inevitably means less visibility for investors, and that could very well have serious consequences, especially at the IPO stage.

Dr. Zhang adds, “the trade-off is reduced transparency. If investors get less frequent standardised information, they may feel less certain and demand a larger discount at IPO, which could increase the cost of capital. The UK moved away from mandatory quarterly reporting since 2014, but research shows fewer than 10% of firms actually stopped quarterly reporting, and those that did saw analyst coverage fall. This implies that firms may conclude that the market still rewards regular disclosure, even when it is no longer mandatory.”

In other words, even if the rules change, market expectations may not, and for startups trying to build credibility in public markets, that could be a critical factor.

Will This Create a Tougher Environment For New IPOs?

According to John Burns, the shift could actually make life harder, not easier, for newly public companies. Burns told TechRound that”dropping quarterly reporting sounds like it would ease the burden on public companies, but it creates a trust problem for IPO-bound firms. New public companies need to prove themselves to investors fast. Quarterly reports give them four chances a year to build credibility, show execution, and demonstrate they belong in the public markets. Cut that to two, and you widen the information gap when investors need reassurance most.”

He continues: “For mature companies, less frequent reporting might free leadership to focus on long-term strategy instead of managing 90-day cycles. For pre-IPO companies, though, the math is different. These firms already face skepticism about their financials. Less transparency does not fix that. It makes it worse.”

And perhaps most notably, “the risk is a two-tier market where large-cap companies coast on reputation while smaller, newly public firms struggle to earn investor trust with fewer data points. More reporting, not less, builds the confidence IPO markets need.”

This raises a key question for the startup ecosystem – that is, could this shift end up giving established players an edge over emerging challengers?

Tossing Up Short-Term Pressure and Long-Term Thinking

One of the biggest criticisms of quarterly reporting is that it encourages short-termism – something many founders and investors have long pushed back against.

Todd Fromer highlights the tension wer see here: “if you think reducing reporting frequency makes IPOs more attractive, you’re missing the bigger issue. Companies don’t stay private because of quarterly reporting – they stay private because the public markets demand consistency, transparency and accountability. The public markets also give founders more control, the ability to think long-term without market reactions, less regulatory burden and compliance cost while also avoiding public scrutiny.”

At the same time, he acknowledges the upside too. Fromer told TechRound that “there is a real argument that quarterly cycles can drive short-term thinking. Management teams end up managing to the next print instead of the long-term strategy. Moving to semiannual reporting could give leadership more breathing room to actually run the business.”

But again, the trade-off is clear, according to Fromer. He believes that “less frequent reporting creates an information vacuum, and markets don’t like vacuums. If you don’t provide consistent updates, investors will fill the gaps themselves, and not always in your favor. The reality is that investor relations have already shifted from pure disclosure to ongoing engagement. If companies reduce formal reporting, they’ll need to communicate more, not less.”

So, Will IPOs Become More Attractive Or More Risky?

The answer, at least for now, is: both.

For some startups, especially those deterred by compliance costs and disclosure demands, the move could make IPOs more appealing. For others, particularly those needing to build trust with public market investors, reduced transparency could introduce new risks.

What’s becoming clear is that removing quarterly reporting won’t fundamentally change the core challenge of going public. If anything, it may shift the burden from formal disclosures to continuous communication and investor engagement.

And for startups, that could prove just as demanding.