The Consequences of Abandoning the Quarterly Reporting Mandate in the Prime Market Segment

Abstract

We examine the determinants and consequences of firms’ interim reporting choices in response to the gradual deregulation of quarterly reporting in the prime market segment of the Vienna Stock Exchange (VSE). Following the deregulation, only a few firms terminate quarterly reporting entirely, while most firms reduce the content of quarterly reports predominantly by omitting the notes disclosures. Our interview and empirical evidence suggest that firms primarily consider the information needs of their key stakeholders, such as institutional (foreign) investors and analysts, as well as their transparency preferences in their interim reporting decisions. Reporting and proprietary costs are less important to prime market firms. Firms that terminate quarterly reporting or substantially reduce the content of quarterly reports experience an economically significant reduction in liquidity, but not a deterioration in analyst forecast properties. Collectively, our results suggest that stakeholders demand quarterly reporting, but not necessarily full quarterly reports.

Keywords: disclosure regulation, reporting frequency, information asymmetry, liquidity, quarterly reporting, interim reporting

JEL Classification: G18, K22, M41, M48