right, but all those reacting would be insiders. wouldn't that mean that my 401k, or my college endowment, or my favorite foundation's endowment would be left holding the bag? why would any institutions invest in such a system?

Hmmm. I wonder to what extent institutional investors are able to get out early when there is an earnings miss. I guess I assume they usually get front run by day traders anyways, but not sure how/where to find data to answer that question.

moreover, if insiders within a listed company were able to trade that company's stock freely, wouldn't it be more consistently profitable for them to intentionally generate surprise volatility in their company's stock price, and then trade against the market with the alpha that they've engineered for themselves? how many other schemes that ultimately defraud investors could be cooked up?

imagine a company that reported realtime profit and loss through the magic of computers in a world with no insider trading regs. the sales team (or whatever team has the biggest ability to impact realtime pnl) would be making and cancelling deals just so they could trade on them.

quarterly earnings and embargoes around them are kind of the last bastion of the idea of ensuring long term incentives, if anything we need more long term incentives, not less.