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The deregulation of quarterly reporting and its effects on information asymmetry and firm value

Author

Listed:
  • Vanessa Behrmann

    (University of Bremen)

  • Lars Hornuf

    (Dresden University of Technology)

  • Daniel Vrankar

    (Dresden University of Technology)

  • Jochen Zimmermann

    (University of Bremen)

Abstract

In this article, we investigate accounting deregulation and analyze whether a reduction in the minimum content requirements for quarterly reporting negatively impacts information asymmetry and reduces firm value. Taking advantage of one of the rare deregulating measures, namely the transposition of the EU’s Transparency Directive into German law, and using a novel dataset of firms listed on the Frankfurt Stock Exchange, we manually examine firms’ quarterly reports for their content elements and construct a new quarterly reporting measure with an ordinal quality dimension. The results show that deregulation reverses beneficial regulatory effects and, on average, increases information asymmetry and decreases firm value. We find that this effect is stronger for first-tier stocks, highlighting the importance of quarterly reporting for these firms. The results are robust to potential selection effects regarding firms’ choice of quarterly reporting content levels.

Suggested Citation

  • Vanessa Behrmann & Lars Hornuf & Daniel Vrankar & Jochen Zimmermann, 2025. "The deregulation of quarterly reporting and its effects on information asymmetry and firm value," Review of Quantitative Finance and Accounting, Springer, vol. 64(3), pages 1221-1259, April.
    • Handle: RePEc:kap:rqfnac:v:64:y:2025:i:3:d:10.1007_s11156-024-01338-5
    DOI: 10.1007/s11156-024-01338-5
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    More about this item

    Keywords

    Quarterly reporting; Disclosure deregulation; Financial reporting; Interim management statement; Transparency directive;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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