Transparency is the basis of trust
Regular quarterly reports are not a bureaucratic end in themselves. They are the foundation for trust in markets and companies. Investors, banks, business partners and, last but not least, employees base their decisions on current figures. Reducing transparency increases uncertainty. The result: higher financing costs, limited trust in corporate management and greater susceptibility to rumours and speculation.
Compliance requires regularity
From a compliance perspective, it is about more than just information requirements. Quarterly reports force companies to regularly disclose and critically examine their internal processes, risks and financial flows. This reporting culture is an effective early warning system. Where figures are only audited every six months or annually, there is an increased risk of window dressing, manipulation or simply delayed reactions to undesirable developments.
Focus on small and medium-sized enterprises
While listed companies are at the centre of the discussion, it is often overlooked that small and medium-sized enterprises also benefit from clear reporting requirements. Many small and medium-sized enterprises are heavily dependent on bank financing. Credit institutions require regular, reliable information. If the general reporting culture is weakened, this increases the scepticism of investors. For small and medium-sized enterprises, this can mean higher interest rates, more difficult lending or additional collateral.
Short-term thinking or management tool?
Critics argue that quarterly reports promote short-term orientation. Companies would focus more on analysts’ expectations than on long-term goals. But transparency and sustainability are not mutually exclusive – on the contrary. Anyone who takes ESG, compliance and good corporate governance seriously needs reliable interim reports. This is the only way for investors and stakeholders to understand whether a company is actually achieving its long-term goals step by step.
Legal and regulatory dimension
In Europe and Germany in particular, the discussion must be conducted differently than in the US. Here, transparency and good corporate governance are central elements of capital market regulation. The German Corporate Governance Code and numerous EU regulations – from the CSRD to the Taxonomy Regulation – rely on regular, verifiable information. Abolishing quarterly reporting would clearly contradict this European model.
Conclusion
As a compliance lawyer, I can only say that transparency is not a burden. It is the foundation of responsible corporate governance. Those who undermine it weaken markets and companies alike.
