More Noise Than Clarity: Should We Rethink The Quarterly Earnings Cycle?
Donald Trump suggested rethinking quarterly company results—a rare idea with global resonance, including for Indian firms.
The Gist
Since 2000, India has mandated quarterly earnings reports for listed companies, evolving into a high-profile event led by Infosys.
- Infosys transformed its Q1 2001 results announcement into a major media event.
- Other IT firms followed suit, but none matched Infosys's flair.
- The practice has sparked debate on the burdens of quarterly reporting amidst calls for change.
India’s era of quarterly results began in 2000, when the markets regulator, the Securities and Exchange Board of India (SEBI), mandated that all listed companies declare their earnings every three months.
Till then, it was only annual results.
However, the practice truly evolved into a spectacle a year later, thanks to IT giant Infosys.
In a move that would set new standards, Infosys transformed its announcement for the Q1 2001 results into a high-production event.
From a specially designed studio in its Bengaluru campus, the company pandered to live business television news, with a press release meticulously detailing the timing for audiences in both India and New York, and the list of speakers, led by then-Chairman and CEO NR Narayana Murthy.
Infosys had masterfully seized the twin opportunity of disclosing its numbers and doing so with unmatched panache.
Over the years, this production only grew in size and scale as other IT firms jumped on the bandwagon. Yet, none could quite match Infosys's chutzpah.
The quarterly drama, often accompanied by voluntary — and highly influential — earnings guidance, became a unique hallmark of the tech sector, serving as a public statement of confidence.
Time For Change?
The whole system of frequent results reporting is now being questioned, after a while.
The debate was reignited when US president Donald Trump suggested on Monday that p...
India’s era of quarterly results began in 2000, when the markets regulator, the Securities and Exchange Board of India (SEBI), mandated that all listed companies declare their earnings every three months.
Till then, it was only annual results.
However, the practice truly evolved into a spectacle a year later, thanks to IT giant Infosys.
In a move that would set new standards, Infosys transformed its announcement for the Q1 2001 results into a high-production event.
From a specially designed studio in its Bengaluru campus, the company pandered to live business television news, with a press release meticulously detailing the timing for audiences in both India and New York, and the list of speakers, led by then-Chairman and CEO NR Narayana Murthy.
Infosys had masterfully seized the twin opportunity of disclosing its numbers and doing so with unmatched panache.
Over the years, this production only grew in size and scale as other IT firms jumped on the bandwagon. Yet, none could quite match Infosys's chutzpah.
The quarterly drama, often accompanied by voluntary — and highly influential — earnings guidance, became a unique hallmark of the tech sector, serving as a public statement of confidence.
Time For Change?
The whole system of frequent results reporting is now being questioned, after a while.
The debate was reignited when US president Donald Trump suggested on Monday that public companies in the US should report only semi-annually — an idea which, incidentally, has simmered quietly within corporate boardrooms for decades.
The drawbacks of six-month reporting are obvious: investors would be left in the dark for half the year, forcing share prices to react more to intuition and public data than to hard numbers.
This lack of transparency could cut both ways, potentially hiding both bad and good news.
However, from a corporate perspective, the current system has often been seen as onerous.
CEOs complain about the immense time, effort, and cost dedicated to compressing a quarter's performance into a report within weeks of its close.
“We are barely 40 days into a quarter and we are already working on the results,” one IT CEO remarked to me a few years ago.
While modern technology has streamlined the consolidation process, the pressure to perform and face investors every 90 days does create stress and encourages a short-term mindset.
This short-termism is the strongest argument for change.
Finding Middle Ground
Companies needing to make long-term bets, particularly in R&D, require breathing room.
The relentless quarterly cycle acts as a disincentive, often pushing CEOs toward decisions that boost short-term returns at the expense of sustainable growth — a problem exacerbated by increasingly shorter CEO tenures.
A middle ground may exist even as we acknowledge that the genie is firmly out of the bottle now.
One solution could involve reduced quarterly disclosures, a ban on guidance, and a reinforced regulatory focus on the immediate reporting of material developments — something that happens in any case.
Ultimately, this debate offers a valuable moment for introspection.
After nearly 25 years of mandated transparency, it’s time to examine what the quarterly earnings saga has truly achieved, and more importantly, what it has not.
This is one Trump brainwave that deserves serious consideration, more than most.
