Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity
Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management
Arthur G. Kraft
City University London - Cass Business School
Nanyang Technological University (NTU)
July 10, 2012
Journal of Accounting & Economics (JAE) 54 (2012): 132–149
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
Date posted: September 16, 2011 ; Last revised: January 7, 2013
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