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Financial reporting frequency, information asymmetry, and the cost of equity

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  • Fu, Renhui
  • Kraft, Arthur
  • Zhang, Huai
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    Abstract

    Using hand-collected data on firms’ interim reporting frequency from 1951 to 1973, we examine the impact of financial reporting frequency on information asymmetry and the cost of equity. Our results show that higher reporting frequency reduces information asymmetry and the cost of equity, and they are robust towards considerations of the endogenous nature of firms’ reporting frequency choice. We obtain similar results when we focus on mandatory changes in reporting frequency. Our results suggest the benefits of increased reporting frequency.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Accounting and Economics.

    Volume (Year): 54 (2012)
    Issue (Month): 2 ()
    Pages: 132-149

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    Handle: RePEc:eee:jaecon:v:54:y:2012:i:2:p:132-149

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    Web page: http://www.elsevier.com/locate/jae

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    Keywords: Interim reporting frequency; Information asymmetry; Cost of equity;

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    Cited by:
    1. Karampatsas, Nikolaos & Petmezas, Dimitris & Travlos, Nickolaos G., 2014. "Credit ratings and the choice of payment method in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 474-493.

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