Pevita Pearce
A significant legislative proposal by the U.S. Securities and Exchange Commission (SEC) to alter the reporting obligations of publicly traded companies on Wall Street has ignited a passionate and complex debate across the United States. The SEC’s initiative aims to shift the reporting cadence from mandatory quarterly filings to semi-annual reports. What makes this discussion particularly noteworthy is that a foundational element of the heated discourse is a study conducted by Dr. Keren Bar-Hava, a distinguished Israeli CPA, researcher, and director. Published several years ago, Dr. Bar-Hava’s research delved into the multifaceted implications of companies adopting semi-annual reporting.
The unique aspect of this ongoing U.S. debate is the way both proponents and opponents of the SEC’s proposal are drawing upon the same Israeli study to bolster their opposing viewpoints. The SEC, in advocating for the legislative change, cites Dr. Bar-Hava’s findings that semi-annual reporting can lead to reduced audit costs for corporations. Conversely, those who oppose the bill leverage the same study to argue that a move to semi-annual reporting would diminish transparency, erode public trust, and ultimately weaken corporate governance. This duality in interpretation underscores the nuanced nature of the research and the strategic utilization of academic findings in policy discussions.
Dr. Keren Bar-Hava, the Israeli academic at the epicenter of this U.S. policy discussion, is a prominent figure in the field of accounting and corporate governance. She currently heads the accounting department at the Hebrew University School of Business Administration and holds a significant position as a member of the Israeli Council of Certified Public Accountants. Her academic work is widely recognized and focuses on critical areas such as market efficiency, corporate governance, and the theoretical and practical considerations of fair value versus historical cost accounting. Her research contributions have been published in esteemed international academic journals, establishing her as a respected voice in her discipline.
Prior to her current academic leadership roles, Dr. Bar-Hava played an active part in shaping regulatory frameworks within Israel. Between 2010 and 2015, she served as a member of the plenary session of the Israel Securities Authority, contributing to the oversight and development of securities regulation in the country. In addition to her academic and regulatory experience, she holds positions as an external director in several Israeli companies, demonstrating her practical engagement with corporate leadership. Notably, she currently serves as a director at ZIM Integrated Shipping Services Ltd., a significant player in the global maritime industry. Dr. Bar-Hava’s commitment to robust corporate governance standards was publicly highlighted in 2024 when she resigned from her directorship at Migdal Insurance Company, citing concerns that the company was not upholding adequate corporate governance practices. This action underscored her principled stance on the importance of transparency and accountability in corporate leadership.
Background to the Israeli Study and its U.S. Resonance
The research by Dr. Bar-Hava, which has become a pivotal point in the U.S. debate, emerged from a period of regulatory evolution in Israel concerning corporate reporting obligations. In Israel, public companies are legally required to submit periodic reports to both the Israel Securities Authority and the Tel Aviv Stock Exchange (TASE). These obligations traditionally encompass both quarterly and semi-annual reports, with the specific scope and requirements varying based on a company’s classification, differentiating between large corporations and smaller entities designated as "exempt small corporations."
A significant regulatory amendment in 2017 introduced a tiered reporting structure. Under this revised framework, large public companies—defined by a market capitalization exceeding NIS 300 million—along with bond issuers and companies listed on the main TASE indices, such as the Tel Aviv 125 Index, were mandated to submit quarterly reports. In contrast, companies categorized as "small corporations" were granted the flexibility to comply with less frequent semi-annual reporting requirements.
Dr. Bar-Hava’s comprehensive study analyzing the implications of this Israeli regulatory shift was published in Israel in 2020. Approximately two years prior to the SEC’s proposal, the key findings of her research were disseminated more broadly through a blog published by Columbia University. This academic platform focused on the implications of transitioning to semi-annual reporting, using the Israeli regulatory model as a case study. The study’s subsequent appearance on this influential platform predated its prominent role in the current U.S. discussion regarding the SEC’s intention to alter reporting paradigms.
The SEC formally introduced its proposal in May 2026, under an agenda theme that evoked a desire for renewed market dynamism, framed as "Make IPOs Great Again." This initiative proposes granting all public companies, irrespective of their size or market capitalization, the option to adopt a semi-annual reporting format. Under this proposed model, a company electing to report semi-annually would submit one semi-annual report and one annual report, thereby replacing the current requirement for quarterly filings.
Support from High Levels and Market Reaction
The SEC’s proposal has garnered support from influential figures, including former U.S. President Donald Trump, who had previously advocated for such a measure during his first term in office. The underlying rationale articulated for this initiative is multifaceted, aiming to reduce operational costs, conserve corporate resources, and combat what is often termed "short-termism." This latter concern refers to the tendency for corporate managers to prioritize short-term financial results, often driven by quarterly reporting pressures, at the expense of long-term strategic planning and sustainable growth. The explanatory memorandum accompanying the SEC’s bill explicitly references Dr. Bar-Hava’s research as a basis for supporting these intended objectives.
The reaction from the U.S. market to the proposed rule change has been exceptionally strong, characterized by an unprecedented volume of public engagement. The SEC received over 200,000 letters of comment, a figure that stands as the highest number of responses ever recorded by the authority for a single proposal. The overwhelming majority of these submissions expressed strong opposition to the bill.
The extensive public feedback was systematically analyzed by Professor Tzachi Zach of Ohio State University. Professor Zach, the founder of an innovative digital tracking project, known as "Tracker," which monitors public and market sentiment toward regulatory proposals, identified a striking consensus among respondents. His analysis revealed that an overwhelming 99% of those who submitted comments were strongly opposed to the elimination of quarterly reporting and the transition to semi-annual reporting. Opponents of the proposal argue that such a shift would significantly harm market transparency, complicate the process of share price discovery, and increase the risk of insider trading. Crucially, these arguments are frequently supported by references to Dr. Bar-Hava’s research findings.
The "Cherry-Picking" Controversy and Dr. Bar-Hava’s Insights
The central question arising from this intense debate is how both sides of the argument can claim Dr. Bar-Hava’s research as support for their opposing positions. In an interview with Globes, Dr. Bar-Hava provided critical clarification on the nuances of her study.
"I conducted the study in order to understand the implications of regulation that allows for less transparency, and as an accountant, I also wanted to see what would happen to the rates of the auditing profession," Dr. Bar-Hava explained. "At that time, there were about 115 companies in Israel that were considered small reporting corporations, which were given the option of choosing semi-annual or quarterly reporting; 75 of them chose the relief and the rest continued with quarterly reporting. The study showed that the smaller and weaker companies chose the relief and that the market also reacted negatively to it."
Her research meticulously documented how investors interpreted the cessation of quarterly reporting as a potential signal that a company might have "something to hide." This perception led investors to incorporate a higher "risk premium" into the valuation of these companies, which was empirically reflected in a subsequent decline in their share prices. Dr. Bar-Hava quantified this impact: "I found that the negative excess return was minus 2.5% in response to the announcement of reporting twice a year instead of four." She contrasted this with the performance of companies that voluntarily continued to report quarterly, even when not mandated to do so: "Companies continued to report four times a year, even though there is no obligation, and the stock rose 2% above the market."
She further illustrated the principle with a personal anecdote: "I serve as a director in a respectable NIS 300 million company that does not have to report quarterly, and the CEO says I can report twice, but I will not do it, and it works in the company’s favor." This personal experience highlights the perceived strategic advantage of maintaining a higher level of disclosure.
Moreover, the study uncovered a significant correlation between the choice of semi-annual reporting and weaker corporate governance structures. "Companies that chose to report twice a year have less experienced directors, less gender diversity, and other things that indicate less good corporate governance," Dr. Bar-Hava stated. She concluded, "So in fact the cost of the move is high—you saved 19% on CPA fees, but investors lose a lot from it." It is this specific finding—the cost savings for auditors—that was highlighted in the U.S. bill, while the more detrimental implications for transparency and governance were seemingly omitted.
Implications of "Cherry-Picking" and Future Outlook
This selective utilization of her research findings has drawn sharp criticism from senior legal experts in the U.S., including those from Harvard and Columbia Universities. These experts have accused the SEC of engaging in "cherry-picking," a practice of selecting only the data that supports a pre-determined conclusion while disregarding contradictory evidence. "They took only the part of the study that suited them, which is great because accountants are paid less money, and they are now being attacked in the U.S.," Dr. Bar-Hava remarked on this phenomenon.
The public comment period for the SEC’s proposal concluded in July 2026, and the commission is now in the process of analyzing the hundreds of thousands of responses received before making a final decision on the rule. Since the bill’s publication, Dr. Bar-Hava has become a highly sought-after interviewee in the United States, and it is anticipated that she may be invited to provide expert testimony or participate in discussions regarding the legislation once the formal objection phase concludes.
When questioned about any discussions or actions taken by the Israeli Securities Authority regarding her study or the implications of reporting frequency, Dr. Bar-Hava expressed a degree of uncertainty and concern. "The opposition in the U.S. is wall to wall, but in Israel I don’t know of any discussion about it. I wonder what is happening with this at the Israeli Securities Authority and what conclusions, if any, have been drawn in Israel regarding the reporting obligation here," she stated. This observation raises questions about the potential for regulatory learning and adaptation across different jurisdictions, particularly when a domestic study has such significant international policy implications.
The ongoing SEC debate, fueled by Dr. Bar-Hava’s seminal research, serves as a critical case study in the complex interplay between academic findings, regulatory policy, and market sentiment. The outcome of this proposal will have significant ramifications for corporate disclosure practices in the United States, underscoring the enduring importance of transparency and robust corporate governance in maintaining investor confidence and market integrity. The strategic use, or indeed misuse, of research in policy-making processes remains a vital area of scrutiny for both regulators and the public.
