Morningstar doesn't do earnings calls. Here's why its CEO agrees with the SEC's plan to drop quarterly reporting.

• The SEC has proposed allowing companies to report earnings twice a year instead of quarterly.
• It would be a sea change for public firms, and one top exec agrees with the move.
• The CEO of Morningstar told Business Insider that he sees clear benefits to less frequent reporting.

Quarterly earnings season could soon be a thing of the past, and there's one chief executive who's onboard with the idea.

Kunal Kapoor, the CEO of Morningstar, thinks the Securities and Exchange Commission's proposal to reduce reporting requirements to twice a year has clear benefits.

He speaks at least partly from experience. The investment research company reports earnings on a quarterly basis, but has never held a call with investors.

On Morningstar's website, the firm says its approach to earnings is meant to ensure all investors are treated and communicated with equally, "without special treatment for large shareholders or research analysts."

Kapoor cited the benefits of the flexibility afforded to firms in Europe, which already has optional quarterly reporting. He also points to countries such as Australia, which has implemented a similar system, though firms there are required to release information with a material impact to shareholders immediately.

Morningstar's approach to investor relations was in place from the start, and Kapoor said that founder Joe Mansueto took inspiration from Warren Buffett. The legendary investor and former Berkshire Hathaway CEO is known for his democratized approach to communications, addressing investors through shareholder letters and at big events like the firm's investor day in Omaha, Nebraska.

Proponents of less frequent reporting say that the quarterly schedule encourages short-term mindsets among executives, with CEOs continuously aiming to please shareholders by beating the current quarter's guidance rather than focusing on running their business.

Kapoor told Business Insider that he thinks if the SEC's proposal is ultimately implemented, the US would do well to take some inspiration from countries that have already adopted similar reporting requirements.

"I think we need to clarify thresholds and provide safe harbors for interim disclosures so companies can share what's appropriate in that sense," he stated, adding that the SEC should also set higher standards for disclosure of other information with investors.

Kapoor added that he also thinks the SEC should discourage companies from giving certain forward guidance metrics like earnings per share, which he thinks promotes myopic behavior by executives.

But, perhaps the biggest benefit would be for companies that aren't yet publicly traded, as the the move to a lower reporting cadence would lower a major cost and regulatory requirement. According to Kapoor, more firms could end up being drawn to go public if the SEC's proposal is adopted.

"I think all of this adds up to lower cost for companies being public, which should encourage more companies to want to go public," he said.

The SEC is taking public comment on its proposal for 60 days.