The Securities and Exchange Commission (SEC) is considering the pros and cons of (i) moving to semi-annual reporting from quarterly reporting, and/or (ii) making quarterly reporting less burdensome by allowing more qualitative disclosures. We exploit the start of less-burdensome and more frequent reporting by the Financial Conduct Authority (FCA) in 2007 and the end of the requirement in 2014 in the United Kingdom to examine corporate and capital market behavior. After the imposition of more frequent reporting in 2007, we find (i) a dramatic decline in the number of companies that issue reports with quantitative information (defined as including both sales and earnings numbers for the quarter), (ii) a substantial increase in companies announcing managerial guidance for the upcoming year’s earnings or sales, and (iii) an increase in analyst following for all sample companies. Companies that voluntarily moved back from more frequent to semi-annual reporting after 2014 have experienced a reduction in analyst coverage. However, we find that the imposition of more frequent reporting and the end of such a requirement have virtually no impact on firms’ investment decisions.
Consequences of More Frequent Reporting: The U.K. Experience Available to Purchase
We acknowledge helpful comments from Salman Arif (discussant), Dirk Black (discussant), Qi Chen, David Erkens, Jonathan Glover, Trevor Harris, Campbell Harvey, Sudarshan Jayaraman, Edward Li (discussant), Bill Mayew, Joshua Ronen (editor), Katherine Schipper, Bryce Schonberger, Mark Soliman, K.R. Subramanyam, Rahul Vashishtha, Mohan Venkatachalam, Rodrigo Verdi, Joanna Wu, workshop participants at Columbia Business School, University of Rochester, and the University of Southern California, and participants at the AAA annual meeting, Conference on Empirical Legal Studies, the Duke-UNC conference, and the Journal of Law, Finance and Accounting Conference. All errors are ours. We acknowledge financial assistance from the CFA Institute. Link to the practitioner version of the paper: https://www.cfainstitute.org/en/research/foundation/2017/impact-of-reporting-frequency-on-uk-public-companies.
Nallareddy S, Pozen R, Rajgopal S (2021), "Consequences of More Frequent Reporting: The U.K. Experience". Journal of Law, Finance and Accounting, Vol. 6 No. 1 pp. 51–88, doi: https://doi.org/10.1561/108.00000051
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