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Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity
Renhui Fu
Erasmus University - Rotterdam School of Management
Arthur G. Kraft
Cass Business School
Huai Zhang
Nanyang Technological University (NTU)
July 10, 2012
Journal of Accounting & Economics (JAE) 54 (2012): 132–149
Abstract:
Using hand-collected data on firms’ interim reporting frequency from 1951 to 1973, we examine the impact of financial reporting frequency on information asymmetry and the cost of equity. Our results show that higher reporting frequency reduces information asymmetry and the cost of equity, and they are robust towards considerations of the endogenous nature of firms’ reporting frequency choice. We obtain similar results when we focus on mandatory changes in reporting frequency. Our results suggest the benefits of increased reporting frequency.
Number of Pages in PDF File: 51
Keywords: interim reporting frequency, information asymmetry, cost of equity
JEL Classification: G14, G18, M41, M45
Accepted Paper Series
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Date posted: September 16, 2011
; Last revised: January 7, 2013
Suggested CitationFu, Renhui, Kraft, Arthur G. and Zhang, Huai, Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity (July 10, 2012). Journal of Accounting & Economics (JAE) 54 (2012): 132–149. Available at SSRN: http://ssrn.com/abstract=1927696 or http://dx.doi.org/10.2139/ssrn.1927696
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