Turning Back the Clock on Disclosure Regulation? – Evidence from the Termination of the Quarterly Reporting Mandate in Europe

42 Pages Posted: 19 Sep 2019

See all articles by Joerg-Markus Hitz

Joerg-Markus Hitz

University of Goettingen

Florian Moritz

University of Goettingen

Date Written: September 11, 2019

Abstract

We investigate economic consequences of the deregulation of quarterly reporting in member states of the European Union, as stipulated by the amended Transparency Directive in 2013. We observe that subsequent to this deregulation, only relatively few firms reduced reporting frequency by switching from quarterly reporting to semi-annual reporting. Using a difference-in-differences design, we then explore the capital market and investment (real) effects of the deregulation. We find that on average, firms that chose to terminate quarterly reporting experienced reductions in liquidity, and increased their long-term investments. These results are robust to controlling for endogeneity, and point at both, potential economic benefits (less short-termism) and losses (reduced transparency) of the deregulation. Our findings represent rare evidence on economic consequences of disclosure deregulation, suggesting that prior regulatory effects can be potentially reversed, effectively “turning back the clock”. This finding is of potential interest not only to researchers, but also to policy-makers and securities regulators.

Keywords: disclosure regulation, deregulation, transparency directive

JEL Classification: G18, K22, M40, M48

Suggested Citation

Hitz, Joerg-Markus and Moritz, Florian, Turning Back the Clock on Disclosure Regulation? – Evidence from the Termination of the Quarterly Reporting Mandate in Europe (September 11, 2019). Available at SSRN: https://ssrn.com/abstract=3451938 or http://dx.doi.org/10.2139/ssrn.3451938

Joerg-Markus Hitz

University of Goettingen ( email )

Platz der Goettinger Sieben 3
D-37073 Goettingen
Germany
+49 551 39 7313 (Phone)

HOME PAGE: http://www.uni-goettingen.de/en/110622.html

Florian Moritz (Contact Author)

University of Goettingen ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

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