September 22, 2025

The curse of quarterly earnings is back in the spotlight! Recently, Donald Trump, the President of the United States, took to Truth Social to boldly call for quitting quarterly earnings reports. But what about India? In our corporate world, every three months, companies must share their financial playbook in what feels like a nationwide drama. Analysts squint over every number, and CEOs nervously explain every rise or fall. This ritual is no joke — SEBI’s rules make Indian firms hand in their quarterly results within 45 days after the quarter ends. While this is supposed to show transparency, big names like Warren Buffett, Jamie Dimon, and former SEBI chairman M. Damodaran say this can actually hurt companies’ long-term health. They say the rush to hit short-term goals forces businesses to cut long-term investments, especially in innovation and research. Stephen Terry from Boston University adds an interesting twist. He found that quarterly pressure can be like a strict coach keeping managers from dreaming too big on R&D. This discipline can boost a company’s value by around 1%. Sounds good? But imagine thousands of companies doing this—cutting innovation budgets to shine in the short term. That is a disaster for the whole economy and national growth. It’s a “tragedy of the commons” where everyone’s smart move is bad for all. And there’s more! Quarterly reporting hits the pocket hard. Big firms spend up to $100,000 per quarter paying lawyers, auditors, and consultants. Small firms pay even more—a huge cost compared to their size. CEOs and CFOs waste precious time too. CEOs spend 2% of their time, and CFOs 5%, just dealing with reports! India isn’t new to this debate. M. Damodaran warned early about this harmful obsession with quick results. In a 2018 interview, he said, “This is not anything new, except the fact that it’s coming from Warren Buffett—that is why everybody is sitting up and taking notice.” Indian CEOs like Uday Kotak, Rohit Jawa, Vishal Sikka, and N. Chandrasekaran have also voiced worries that quarterly pressure hurts long-term company and industry growth. Here’s the big picture: quarterly reports were meant to bring clarity but now act like a value-draining machine. Countries like the EU, Japan, and Singapore have cut back or changed how companies report, and guess what? Companies didn’t collapse! Even in the UK, when rules loosened, over 90% of firms kept reporting quarterly. Meanwhile, China races ahead in innovation, with less focus on frequent reporting. India’s sticking to the old way, which mainly helps short-term traders, not long-term investors—the true champions of markets. With high mutual fund churn and government pushes like Production-Linked Incentives showing weak R&D, India’s future growth is at stake. Soon, the pressure of quarterly earnings may be called the “innovation butcher.” As the world speeds up, corporate India and regulators must dare to break free from this short-term trap and give innovation room to breathe.

Read More at Economictimes →

Tags: Quarterly earnings, Short-termism, Indian companies, Sebi, Corporate innovation, Warren buffett,