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Consequences of More Frequent Reporting: The U.K. Experience

Author

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  • Nallareddy, Suresh
  • Pozen, Robert
  • Rajgopal, Shivaram

Abstract

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.

Suggested Citation

  • Nallareddy, Suresh & Pozen, Robert & Rajgopal, Shivaram, 2021. "Consequences of More Frequent Reporting: The U.K. Experience," Journal of Law, Finance, and Accounting, now publishers, vol. 6(1), pages 51-88, May.
    • Handle: RePEc:now:jnllfa:108.00000051
    DOI: 10.1561/108.00000051
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    Cited by:

    1. Haga, Jesper & Högholm, Kenneth & Sundvik, Dennis, 2022. "Peer firms’ reporting frequency and stock price synchronicity: European evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 49(C).

    More about this item

    Keywords

    Quarterly reporting; analyst following; investments; disclosure;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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