Negative Externalities of Financial Reporting Frequency: Peer Reporting Choice and the Loss of Investor Attention

58 Pages Posted: 12 Aug 2019 Last revised: 22 Dec 2019

See all articles by Emmanuel T. De George

Emmanuel T. De George

University of Miami

Minh Phan

Columbia University

Robert C. Stoumbos

Columbia University - Columbia Business School

Date Written: August 5, 2019

Abstract

This study examines whether one firm’s choice of reporting frequency generates negative externalities for other firms. We find that firms lose investor attention when more of their peers report quarterly instead of semi-annually, and such loss of attention is associated with a decrease in market value and market liquidity. Thus, firms experience negative externalities when their peers report quarterly. We find that the loss of attention is robust to alternative specifications, settings, and additional controls that capture other disclosures by peers. Finally, we test for, but fail to find, evidence of positive externalities in the form of information spillovers. Overall our evidence suggests that firms are negatively impacted when their peers choose to adopt a higher reporting frequency.

Keywords: Financial Reporting Frequency, Investor Attention, Spillovers

JEL Classification: G10, M41, M48

Suggested Citation

De George, Emmanuel T. and Phan, Minh and Stoumbos, Robert C., Negative Externalities of Financial Reporting Frequency: Peer Reporting Choice and the Loss of Investor Attention (August 5, 2019). University of Miami Business School Research Paper No. 3433828, Available at SSRN: https://ssrn.com/abstract=3433828 or http://dx.doi.org/10.2139/ssrn.3433828

Emmanuel T. De George (Contact Author)

University of Miami ( email )

Coral Gables, FL 33146-6531
United States
305-284-2273 (Phone)

Minh Phan

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Robert C. Stoumbos

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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