Could Semiannual Reporting Make Earnings Moves Bigger?

Semiannual reporting could make some earnings moves bigger, according to the SEC's own economic analysis, but that is a possible effect of a proposal and not a measured result. The SEC proposed in May 2026 that companies could file one semiannual Form 10-S instead of three quarterly 10-Qs, and the plan was not adopted as of October 2026. The release says less frequent reporting may increase "jump" volatility, because prices may update by larger amounts at once. It gives no estimate of how large such moves might be, and it asks the public for views on exactly that question.

What does the SEC actually say about volatility around earnings?

The SEC's statements on this topic sit in the economic analysis of proposing release 33-11414, and they come in three forms that are worth keeping apart. The first is the Commission's own analysis, which says less frequent periodic disclosure may result in increased "jump" volatility that may in turn reduce liquidity. The second is a summary of comment letters, in which some commenters argued that ending quarterly reporting may increase stock price volatility, particularly around earnings announcements. The third is an open question, because the SEC asks the public whether, for semiannual filers that would not release earnings quarterly, price movements around semiannual reports would be more volatile than movements around quarterly releases, and why.

None of the three is a forecast for a specific stock, and none comes with a number. The proposal was issued on May 5, 2026, public comments were due on July 6, and as of October 12, 2026 the SEC's rulemaking page for file S7-2026-15 still lists the rule type as Proposed, with no final rule. Everything below describes what the SEC wrote about a rule that may or may not be adopted. How the Form 10-S option itself would work, including the check box on the annual report, is covered in hi2morrow's overview of what SEC Form 10-S is and where the proposal stands.

Why would fewer reports mean bigger price jumps?

The SEC's reasoning starts with information that builds up between reports. The release notes that researchers have found longer gaps between company disclosures increase information asymmetry between investors, because some investors are better able than others to access or process alternative, often third-party, information about a company's performance. One study it cites found that this asymmetry grows steadily between earnings announcements until a new announcement brings it down, and that semiannual reporting was associated with greater asymmetry than quarterly reporting in the second half of each six-month period.

From there the analysis takes two steps. Less frequent disclosure may let prices drift away from a company's fundamental value for longer, and when the report finally arrives, prices "may update by larger amounts under a less frequent periodic disclosure schedule, rather than more incrementally across multiple shorter disclosure cycles," in the release's words. The release calls this "jump" volatility, which in plain terms means that information would reach the price in fewer, larger steps instead of several smaller ones.

A simple illustration shows the mechanism, with every number invented. ABC and XYZ are identical companies trading at $50, and over six months the same two pieces of bad news hit both businesses. ABC files quarterly, so the first piece comes out in its spring report and the market reprices the stock by about 3%, to $48.50, and the second comes out three months later and takes it down about 4% more, to roughly $46.56. XYZ is a hypothetical semiannual filer that publishes nothing between its reports, so both pieces surface in one August filing, and the market may reprice it from $50 toward about $46.56 in a single step of nearly 7%. The total change is the same, but XYZ's earnings-day move is larger because it carries six months of news instead of three.

The illustration is our own rather than the SEC's, and it has two limits that matter. Extending the same made-up example, if the two quarters had brought news in opposite directions, the single semiannual update could be smaller than either quarterly move, so in this illustration the effect concerns how information is bundled, not a built-in bias toward big moves. And in real markets part of that information would likely reach prices earlier, through alternative data, peer companies' reports, or Form 8-K filings, so XYZ's report day might not carry the full change at all. A larger single repricing is also the kind of move in which resting stop orders can execute well away from their trigger.

What did commenters say about earnings-day volatility?

The release reports that some commenters argued the elimination of quarterly reporting may increase stock price volatility, particularly around earnings announcements. The letters it cites date from 2019, and they describe concerns about impeded price discovery and prices that would carry a larger premium for uncertainty. The release attributes these points to commenters rather than presenting them as its own findings.

The same section points to a less obvious consequence. With fewer periodic reports, investors could lean more heavily on other required disclosures that arrive between them, such as current reports on Form 8-K and insider transaction reports on Form 4, and the release says this could result in greater price movements following those disclosures. In other words, if the analysis is right, some of the volatility would not necessarily wait for the semiannual report and could appear on days that are not on any earnings calendar.

Analyst coverage is another channel the SEC discusses, and it can cut both ways. Analysts could supply some of the information that the first- and third-quarter reports would have contained, but studies of foreign markets found that companies reporting more often tend to have more analysts following them, and the release says that if semiannual reporting reduced analyst following, the information those analysts would have produced would be lost and asymmetry would grow further. It adds that these effects may fall hardest on less sophisticated or less resourced investors who rely more on periodic reports.

What could limit the effect?

The SEC's analysis also names forces that could soften all of this. It says the asymmetry and volatility effects may be mitigated by alternative sources of information and by market discipline, most likely where alternative data exists and traders have strong incentives to collect it. Large companies are the SEC's own example, because investors may have abundant opportunities for private data collection and analysis on them, so a significant amount of information may reach their prices even without a public report, although the release adds that price discovery may still be less complete. In a footnote, it even notes that under some circumstances reduced public disclosure could push private research far enough that price discovery could improve.

The bigger limit is that the option would not apply to anyone automatically. For its analysis, the release sorts companies into three groups based on how they could respond: quarterly reporters that keep filing 10-Qs, semiannual reporters that file a Form 10-S without regular voluntary updates for the first and third quarters, and hybrid reporters that file semiannually but keep quarterly earnings releases, guidance, or calls. The release says the proposal would meaningfully alter the frequency and timing of disclosure for semiannual reporters, while hybrid reporters would preserve aspects of today's quarterly information environment, a split covered in hi2morrow's guide to whether companies would still report quarterly earnings under Form 10-S. Chairman Atkins' statement on the proposal said it would not affect the frequency of a company's earnings call and earnings release, which would remain the company's own decision.

Foreign experience suggests the first group could be small. The release cites a study finding that when the United Kingdom stopped requiring quarterly reports in 2014, fewer than 10% of companies had stopped issuing them by the end of 2015, and the SEC treats this as broadly illustrative rather than a prediction. For some companies quarterly numbers also matter less to the stock price than other events: the release gives the example of a pre-revenue biotech company and notes that biotech shares may trade more on clinical and regulatory developments than on quarterly financial results, citing a remark that those events are captured in Form 8-K filings.

Alexander Styopin's professional view: the useful question is not whether earnings moves get bigger in general, but which group a particular company ends up in. A company that keeps its quarterly release and call would likely look much the same to the market on earnings day, and the SEC's "jump" argument applies with full force only to the companies that go quiet between two reports a year. The SEC's own point about Form 8-K and Form 4 also deserves attention, because if information leaks out through other filings, the surprise may shift to dates that traders do not have marked on their calendar.

What could it mean for liquidity and spreads?

The SEC links the same information problem to trading costs. The release says information asymmetry is associated with reduced liquidity and increased transaction costs for investors, a point it supports with a citation to academic research rather than with an estimate for this proposal. It also says the "jump" volatility it describes may reduce liquidity, and one study it cites found that satellite data available to some investors led to greater asymmetry and lower stock liquidity around retailers' reports.

None of this is quantified for the proposal, and the release describes the possible effects of semiannual reporting on liquidity with "may" and "could" rather than as measured outcomes. If the effects did appear, the most likely place to notice them would be the quoted spread and depth around a semiannual report or a material Form 8-K, in line with the general pattern of spreads widening around news. Whether that difference would be large enough to matter for a given stock is something the release does not try to measure.

What do we not know yet?

The first unknown is whether the rule will exist at all. As of October 12, 2026, the SEC has not published a final rule or a vote date, the release gives no compliance date, and the final text could differ from the proposal or never be adopted. The second is which companies would opt in, since the SEC itself asks commenters what percentage of 10-Q filers would likely switch.

The third unknown is the size of any effect. The release offers no estimate of how much bigger semiannual report moves might be, and the question it puts to commenters about volatility around semiannual reports is still open. It also flags a transition issue: uncertainty about a company's future reporting frequency could itself raise share price volatility until the company makes its choice known. Finally, the release does not address options pricing or implied volatility, so any claim about how options would react to Form 10-S is not based on this document.

If the rule is adopted, the answer for each company would come from its own filings, starting with the semiannual check box on the cover of its annual report, explained in hi2morrow's guide to how you would know if a company reports semiannually, and whatever it says about keeping quarterly earnings releases. Until then, what can be said with confidence is limited to what the SEC wrote: larger "jump" moves are a possibility the Commission itself raised and then left open for comment.

Educational material only. Not investment or legal advice. The proposal could change before any final rule, and the effects described here are possibilities discussed by the SEC, not forecasts for any security.

Author: Alexander Styopin, hi2morrow analyst and economist with 25 years of experience in the US stock market