Frequent Financial Reporting and Managerial Myopia

Kraft, A., Vashishtha, R. & Venkatachalam, M. (2017). Frequent Financial Reporting and Managerial Myopia. Accounting Review, doi: 10.2308/accr-51838

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Using the transition of US firms from annual reporting to semi-annual reporting and then to quarterly reporting over the period 1950-1970, we provide evidence on the effects of increased reporting frequency on firms’ investment decisions. Estimates from difference-in-differences specifications indicate that increased reporting frequency is associated with an economically large decline in investments. Additional analyses reveal that the decline in investments is most consistent with frequent financial reporting inducing myopic management behavior. Our evidence informs the recent controversial debate about eliminating quarterly reporting for US corporations.

Item Type: Article
Uncontrolled Keywords: Financial reporting frequency; real effects; myopia; investment; short termism
Subjects: H Social Sciences > HG Finance
Divisions: Cass Business School > Faculty of Finance

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