IBM’s recent move to file an 8‑K warning about earnings was a clear example of a company prioritising truthful disclosure over a tidy quarterly report. The announcement, which caused a 25 percent drop in shares, showed that investors value transparency, even if it means a short‑term hit.

In the U.S., companies normally rely on quarterly reporting to signal changes in trading conditions and expectations. Unscheduled announcements are the exception, which can leave markets misinformed for longer periods. The SEC’s proposals to shift to semi‑annual reporting would therefore need a cultural shift in how firms communicate earnings and risk.

Under UK and European rules, continuous disclosure forces firms to issue a press release if consensus estimates diverge by more than 10 percent. In the U.S., the trigger is largely litigation risk rather than materiality, which discourages firms from providing forward guidance. The result is that only about a quarter of firms give annual guidance, and less than half of the S&P 500 do so.

A hybrid model that keeps guidance while allowing out‑of‑cycle announcements could combine the best of both worlds, but it requires a shift away from court‑driven disclosure and toward more meaningful investor communication.