Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity

51 Pages Posted: 16 Sep 2011 Last revised: 7 Jan 2013

Renhui Fu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Arthur G. Kraft

City University London - Cass Business School

Huai Zhang

Nanyang Technological University (NTU)

Date Written: July 10, 2012

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.

Keywords: interim reporting frequency, information asymmetry, cost of equity

JEL Classification: G14, G18, M41, M45

Suggested Citation

Fu, Renhui and 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: https://ssrn.com/abstract=1927696 or http://dx.doi.org/10.2139/ssrn.1927696

Renhui Fu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

1954 Huashan Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200030
China
+862152301575 (Phone)

Arthur Gerald Kraft (Contact Author)

City University London - Cass Business School ( email )

London, EC2Y 8HB
Great Britain

Huai Zhang

Nanyang Technological University (NTU) ( email )

Nanyang Business School
50 Nanyang Ave.
Singapore, 639798
Singapore
+65-6790-4097 (Phone)

Paper statistics

Downloads
725
Rank
26,927
Abstract Views
2,480