Jenna D’Adduzio, David S. Koo, Santhosh Ramalingegowda, Yong Yu
{"title":"Does More Frequent Financial Reporting Bring the Future Forward?","authors":"Jenna D’Adduzio, David S. Koo, Santhosh Ramalingegowda, Yong Yu","doi":"10.2308/horizons-2022-030","DOIUrl":null,"url":null,"abstract":"\n Exploring mandatory financial reporting frequency changes in the United States from 1954 to 1972, we find that a mandatory increase in reporting frequency is associated with an increase in firms’ future earnings response coefficients. This effect is stronger for firms with higher sales seasonality or operating in industries with lower earnings persistence and for firms that provide more voluntary disclosures of forward-looking information after the reporting frequency increase. We also find that investors increase (decrease) the weight on long-term (near-term) earnings when pricing the firm after the reporting frequency increase. Our findings suggest that more frequent mandatory reporting can enhance the ability of investors to predict future earnings by providing additional useful information on future earnings and by triggering more voluntary disclosures. Our study informs the ongoing policy debates on mandatory financial reporting frequency by highlighting the informational benefit of frequent financial reporting for investors.\n Data Availability: Data are available from public sources identified in the paper.\n JEL Classifications: G14; M41; M48.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":null,"pages":null},"PeriodicalIF":2.2000,"publicationDate":"2024-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounting Horizons","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.2308/horizons-2022-030","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Exploring mandatory financial reporting frequency changes in the United States from 1954 to 1972, we find that a mandatory increase in reporting frequency is associated with an increase in firms’ future earnings response coefficients. This effect is stronger for firms with higher sales seasonality or operating in industries with lower earnings persistence and for firms that provide more voluntary disclosures of forward-looking information after the reporting frequency increase. We also find that investors increase (decrease) the weight on long-term (near-term) earnings when pricing the firm after the reporting frequency increase. Our findings suggest that more frequent mandatory reporting can enhance the ability of investors to predict future earnings by providing additional useful information on future earnings and by triggering more voluntary disclosures. Our study informs the ongoing policy debates on mandatory financial reporting frequency by highlighting the informational benefit of frequent financial reporting for investors.
Data Availability: Data are available from public sources identified in the paper.
JEL Classifications: G14; M41; M48.
期刊介绍:
Accounting Horizons is one of three association-wide journals published by the American Accounting Association AAA. This journal seeks to bridge academic and professional audiences with articles that focus on accounting, broadly defined, and that provide insights pertinent to the accounting profession. The contents of Accounting Horizons, therefore, should interest researchers, educators, practitioners, regulators, and students of accounting.