The Effect of Reporting Frequency on the Timeliness of Earnings: The Cases of Voluntary and Mandatory Interim Reports
Arthur G. Kraft
City University London - Cass Business School
Ira S. Weiss
University of Chicago - Graduate School of Business; Columbia Business School - Department of Accounting
LBS Working Paper No. 037
We examine whether financial reporting frequency affects the speed with which accounting information is reflected in security prices. For a sample of 28,824 reporting-frequency observations from 1950 to 1973, we find little evidence of differences in timeliness between firms reporting quarterly and those reporting semiannually, even after controlling for self-selection. However, firms that voluntarily increased reporting frequency from semiannual to quarterly experienced increased timeliness, while firms whose increase was mandated by the SEC did not. We conclude that there is little evidence to support the claim that regulation forcing firms to report more frequently improves earnings timeliness.
Number of Pages in PDF File: 50
Keywords: Earnings timeliness, voluntary disclosure, regulation, information asymmetry, agency costs
JEL Classification: D82, G38, M41, L51
Date posted: July 18, 2002
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