The Securities and Exchange Commission on Tuesday issued a proposal that would allow publicly traded companies to opt out of quarterly earnings reporting in favor of semiannual financial disclosures.

Under the current system, public companies are required to file quarterly reports with the SEC, providing investors with financial updates four times per year. The new proposal would give companies the flexibility to report earnings and financial information only twice annually if they choose.

The proposal represents a significant potential shift in corporate reporting requirements that have been standard practice for decades. Quarterly earnings reports have long been viewed as essential for maintaining transparency and providing investors with regular updates on company performance.

Proponents of reduced reporting frequency argue that quarterly requirements can encourage short-term thinking among corporate executives and divert resources from long-term strategic planning. Critics, however, contend that less frequent reporting could reduce transparency and make it more difficult for investors to monitor company performance.

The SEC's proposal comes amid ongoing debates about corporate governance and the balance between regulatory oversight and business flexibility. If implemented, the change would mark one of the most substantial modifications to public company reporting requirements in recent years.

The proposal is currently in the public comment period, and the SEC will review feedback before making a final determination on whether to implement the new reporting options.