The Consequences of Abandoning the Quarterly Reporting Mandate in the Prime Market Segment: Evidence from Austria

51 Pages Posted: 8 Jul 2021

See all articles by Tobias Bornemann

Tobias Bornemann

Vienna University of Economics and Business

Anna-Lena Moosmann

Vienna University of Economics and Business

Zoltán Novotny-Farkas

Vienna University of Economics and Business

Date Written: July 7, 2021

Abstract

This study investigates firms’ reporting choices and ensuing capital market effects in response to the gradual deregulation of quarterly reporting in the prime market segment of the Vienna Stock Exchange (VSE). First, in November 2015, the VSE abandoned the mandate to prepare quarterly reports in compliance with International Accounting Standard (IAS) 34 Interim Financial Reporting. We observe that half of the prime market firms stop IAS 34 compliance until 2018, but do not experience any adverse effects on their stock liquidity. Second, in February 2019, the VSE completely terminated the quarterly reporting mandate. Only a few firms abandon quarterly reporting, but about half of firms reduce the scope (i.e., the content) of quarterly reports to varying degrees. We find that firms that terminate or reduce the scope of quarterly reporting the most, experience a significant decrease in stock liquidity. Taken together, our findings suggest that firms carefully trade off the economic benefits of discretionary presentation format, lower reporting frequency and scope against associated economic costs in the form of reduced liquidity.

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

JEL Classification: G18, K22, M41, M48

Suggested Citation

Bornemann, Tobias and Moosmann, Anna-Lena and Novotny-Farkas, Zoltán, The Consequences of Abandoning the Quarterly Reporting Mandate in the Prime Market Segment: Evidence from Austria (July 7, 2021). Available at SSRN: https://ssrn.com/abstract=3881711 or http://dx.doi.org/10.2139/ssrn.3881711

Tobias Bornemann (Contact Author)

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Anna-Lena Moosmann

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Zoltán Novotny-Farkas

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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