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

Abstract

Fu, Kraft and Zhang (2012) use a hand-collected sample of firms with different interim reporting frequencies from 1951 to 1973 to test whether higher reporting frequency is associated with lower information asymmetry and a lower cost of equity capital. Their results suggest that firms with higher reporting frequency (e.g., firms reporting quarterly as opposed to annually) have lower information asymmetry and a lower cost of equity capital. In this discussion, I expand on FKZ by elaborating on their hypothesis development and research design, and providing suggestions for future research.

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

JEL Classification: G14, G18, M41, M45