Does mandatory quarterly reporting induce managerial myopic behavior? Evidence from Japan

Abstract

While quarterly reporting can provide timely information to investors and mitigate information asymmetry between managers and investors, it may also generate managerial myopic behavior. This study examines whether mandatory quarterly reporting induces managerial myopic behavior in Japanese firms. Using a difference-in-differences approach, we find that mandatory quarterly reporting is associated with an increase in managerial myopic behavior, proxied by real earnings management. We also find that this association is stronger for firms with higher foreign ownership. Our findings suggest that mandatory quarterly reporting encourages managerial myopic behavior, especially when market pressure is stronger.