Quarterly Reporting Research Articles

The Consequences of Abandoning the Quarterly Reporting Mandate in the Prime Market Segment

We examine the determinants and consequences of firms’ interim reporting choices in response to the gradual deregulation of quarterly reporting in the prime market segment of the Vienna Stock Exchange (VSE). Following the deregulation, only a few firms terminate quarterly reporting entirely, while most firms reduce the content of quarterly reports predominantly by omitting the notes disclosures. Our interview and empirical evidence suggest that firms primarily consider the information needs of their key stakeholders, such as institutional (foreign) investors and analysts, as well as their transparency preferences in their interim reporting decisions. Reporting and proprietary costs are less important to prime market firms. Firms that terminate quarterly reporting or substantially reduce the content of quarterly reports experience an economically significant reduction in liquidity, but not a deterioration in analyst forecast properties. Collectively, our results suggest that stakeholders demand quarterly reporting, but not necessarily full quarterly reports.

Does Mandatory Quarterly Reporting Induce Managerial Myopic Behavior? Evidence from Japan

Does Mandatory Quarterly Reporting Induce Managerial Myopic Behavior? Evidence from Japan

Calling Back the Wave: Did the De-Regulation of Quarterly Reporting Accomplish Its Intended Goals?

Calling Back the Wave: Did the De-Regulation of Quarterly Reporting Accomplish Its Intended Goals?

The Consequences of Abandoning the Quarterly Reporting Mandate in the Prime Market Segment: Evidence from Austria

This study investigates firms’ reporting choices and ensuing capital market effects in response to the gradual deregulation of quarterly reporting in the prime market segment of the Vienna Stock Exchange (VSE). First, in November 2015, the VSE abandoned the mandate to prepare quarterly reports in compliance with International Accounting Standard (IAS) 34 Interim Financial Reporting. We observe that half of the prime market firms stop IAS 34 compliance until 2018, but do not experience any adverse effects on their stock liquidity. Second, in February 2019, the VSE completely terminated the quarterly reporting mandate. Only a few firms abandon quarterly reporting, but about half of firms reduce the scope (i.e., the content) of quarterly reports to varying degrees. We find that firms that terminate or reduce the scope of quarterly reporting the most, experience a significant decrease in stock liquidity. Taken together, our findings suggest that firms carefully trade off the economic benefits of discretionary presentation format, lower reporting frequency and scope against associated economic costs in the form of reduced liquidity.

Disclosure Deregulation of Quarterly Reporting

In this article, we investigate the deregulation efforts resulting from the 2015 transposition of the EU’s Transparency Directive into German law and analyze whether a reduction in the minimum content requirements for quarterly reporting increases information asymmetries and decreases firm value. Using a novel dataset of firms that are listed on the Frankfurt Stock Exchange, our results reveal that over the period from 2012 to 2019, lower quarterly reporting levels on average have increased information asymmetry and reduced firm value. We find that this effect is stronger for second-tier stocks and firms with low media coverage. Our results are robust to potential selection effects regarding firms’ choice of quarterly reporting content levels.

Preparers’ Perceptions Towards Quarterly Financial Reporting in Malaysia

This study examines the perceptions of preparers of financial reports towards the issues surrounding corporate quarterly financial reporting in Malaysia. Questionnaires were mailed to chief financial officers of the Kuala Lumpur Stock Exchange (KLSE)1 listed companies, from whom 106 usable responses were gathered. The findings provide evidence that some preparers are not keen of the idea of quarterly reporting, despite the enforcement of the requirement. However, a majority of preparers are content with the current allowable reporting lag of two months, satisfied with the current content of the quarterly reports, and agree that management should at least discuss the quarterly results with the auditors. With respect to other matters, preparers expressed the view that the quarterly reports are reliable. However, there is also evidence that the first three quarterly reports are perceived to be less reliable than the fourth quarterly reports. The findings serve as an avenue for more research on quarterly financial reporting in Malaysia and other jurisdictions.

Discretionary tone, annual earnings and market returns: Evidence from UK Interim Management Statements

This study contributes to the tone management literature by examining the discretionary tone of Interim Management Statements (IMSs) in the context of UK quarterly reporting. Specifically, it provides evidence that the discretionary tone of third-quarter IMSs, but not first-quarter IMSs, is positively aligned with annual earnings. Further analysis reveals a negative association between third-quarter discretionary negative tone and annual earnings. The discretionary tone is also more positively aligned with contemporaneous abnormal market returns in the third quarter than in the first quarter. Additional analysis provides new insights on the efficacy of the IMS discretionary positive tone during the 2008 financial crisis, and on the policy debate of the IMS as an alternative to the full quarterly report.

Less is More? Decreases in Disclosure and Information Asymmetry

Based on the ongoing disclosure overload debate, this paper investigates how deregulation-driven decreases in quarterly disclosure affect information asymmetry. We exploit a German setting in which the minimum content requirements for quarterly reporting have been reduced for firms listed in the Prime Standard segment of the Frankfurt Stock Exchange (FSE). This deregulation allows Prime Standard companies to choose whether to continue to publish full quarterly financial reports or to switch to so-called quarterly statements to meet their quarterly reporting obligations. Compared to full quarterly reports, the latter have significantly lower minimum content requirements. Based on a difference-in-differences research design, our results provide empirical evidence that decreases in quarterly disclosure come along with statistically and economically significant increases in information asymmetry. However, we find that this effect is particularly driven by smaller firms, which operate in weaker information environments. Additionally, our results confirm that this information asymmetry effect is associated with the extent of actual decreases in (specific content-related types of) quarterly disclosure.

Turning Back the Clock on Disclosure Regulation? – Evidence from the Termination of the Quarterly Reporting Mandate in Europe

We investigate economic consequences of the deregulation of quarterly reporting in member states of the European Union, as stipulated by the amended Transparency Directive in 2013. We observe that subsequent to this deregulation, only relatively few firms reduced reporting frequency by switching from quarterly reporting to semi-annual reporting. Using a difference-in-differences design, we then explore the capital market and investment (real) effects of the deregulation. We find that on average, firms that chose to terminate quarterly reporting experienced reductions in liquidity, and increased their long-term investments. These results are robust to controlling for endogeneity, and point at both, potential economic benefits (less short-termism) and losses (reduced transparency) of the deregulation. Our findings represent rare evidence on economic consequences of disclosure deregulation, suggesting that prior regulatory effects can be potentially reversed, effectively “turning back the clock”. This finding is of potential interest not only to researchers, but also to policy-makers and securities regulators.

The Effect of Mandatory Quarterly Reporting on Firm Value

ABSTRACT We exploit a regulatory change in Singapore to analyze the capital market effects of mandatory quarterly reporting. The listing rule implemented in 2003 has required firms with a market capitalization above S$75 million—but not firms with a market capitalization below this threshold—to publish quarterly financial statements. Using regression discontinuity analysis for our identification, we provide novel evidence of the causal effects of mandatory quarterly reporting on small firms. We find a 5 percent decrease in firm value, consistent with the notion that mandatory quarterly reporting is perceived as a net burden for small firms. Contrary to popular belief, we cannot find evidence of informational benefits or myopic investment for firms around the threshold. Additional tests suggest positive information spillover effects from large mandatory quarterly reporters to non-quarterly reporting firms. JEL Classifications: M41; M48.

The Real Effects of Mandatory Quarterly Reporting

ABSTRACT This paper examines how mandatory quarterly reporting affects managers' business decisions in terms of real activities manipulations. For our analyses, we use the setting of the European Union, where the reporting frequency was increased with the introduction of a mandate to issue Interim Management Statements (IMSs) on a quarterly basis. Controlling for accrual-based earnings management, we find an increase in real activities manipulations for firms mandated to switch from semiannual to quarterly IMS reporting, relative to matched control firms. This finding is in line with the notion of higher managerial short-termism resulting from increased reporting frequency requirements. Further, we provide evidence that reporting frequency-induced real activities manipulations are more pronounced if the price pressure from investors is high and if the informativeness of IMS disclosure is low. We also document that reporting frequency-induced real activities manipulations are followed by a short-term increase and then a decrease in firms' operating performance. Data Availability: Data are available from the commercial databases and public sources identified in the paper.

The Real Effects of Mandatory Quarterly Reporting

The Real Effects of Mandatory Quarterly Reporting

Consequences of Mandatory Quarterly Reporting: The U.K. Experience

The Securities and Exchange Commission (SEC) is considering the pros and cons of moving to semi-annual reporting from quarterly reporting at least for certain segments of the market. However, documenting causal evidence on the consequences of mandatory quarterly reporting has been difficult, due to either the absence of a clear exogenous shock or older data. We exploit the start of mandatory quarterly 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 imposition of mandatory quarterly 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. However, using a difference-in-differences analysis, we find that the imposition of mandatory quarterly reporting has virtually no impact on firms’ investment decisions. Companies that voluntarily moved back from quarterly to semi-annual reporting after 2014 have experienced a reduction in analyst coverage, but no detectable increases in their levels of corporate investments.

206 Quarterly Reporting of Computed Tomography Ordering History Reduces the Use of Imaging in an Emergency Department

206 Quarterly Reporting of Computed Tomography Ordering History Reduces the Use of Imaging in an Emergency Department

A Policy Analysis of Interim Financial Reporting in Singapore

The choice of interim financial reporting frequency is a hotly debated policy question framed as the choice of quarterly or semi-annual reporting. The choice of reporting frequency is strongly influenced by the jurisdiction’s political processes. The argument for quarterly reporting relies on price efficiency benefiting shareholders, and argument against quarterly reporting relies on capital investment argument, framed from the position of preparers and investors. We introduce the Cost-Benefit Analysis framework which is useful from the policy maker perspective. We identify that empirical estimation of demand and supply curves for quarterly report is the key to resolving the reporting frequency debate in each jurisdiction.

Disclosure Practices in Nepalese Insurance Companies

The objective of this paper is to examine the financial reporting and corporate disclosure practices of insurance industry in Nepal. Among 25 insurance companies, 22 companies had taken for the study. The paper has been prepared on the basis of prevailing rules and regulation, annual reports and secondary information. The paper is descriptive in nature and data has been analysed using both descriptive and inferential statistical tools. Corporate disclosure index has been prepared on the basis of four disclosure dimensions: submission deadline of annual report, submission deadline of quarterly reports, completeness of the director's disclosure report and organising annual general meeting within the prescribed period. The paper concludes that directors' disclosure practice and organising AGM within the prescribed period have highest score, timely reporting score has lowest score and quarterly reporting score is moderate. The disclosure practice between life and non-life insurance company has no significant and there was no improvement on disclosure practice during the FY 2012/2013 as compared to previous year. Overall disclosure practice is not found satisfactory during the study period.

Causal Effects of Quarterly Reporting An Analysis of Benefits and Costs

We exploit a regulatory change in Singapore to analyze the capital market effects of mandatory quarterly reporting on small firms. The listing rule implemented in 2003 has required firms with a market capitalization above S$75 million — but not firms with a market capitalization below this threshold — to publish quarterly financial statements. Using regression discontinuity analysis for our identification, we provide novel evidence on the causal effects of mandatory quarterly reporting. We find a decrease in firm value consistent with the notion that mandatory quarterly reporting imposes a net burden on small firms. Contrary to general belief, and in line with our main finding, we observe no improvements in liquidity. Our results also show that quarterly reporting does not complement or substitute for existing corporate governance mechanisms to improve liquidity.

The Consequences of Untimely Quarterly and Annual Financial Reporting

We find that while the market reacts negatively to all late filing announcements, the reaction is stronger to late quarterly-filing announcements than to late annual-filing announcements, especially when accounting problems explain the delay. This is consistent with accounting problems signaling deeper problems when they delay quarterly filings than when they delay annual filings. Moreover, the market responds negatively when managers declare they intend to file within the SEC’s allowed grace period, even though such filings are considered timely. Interestingly, the market also “sees through” managers’ assertions that they will file within the SEC’s allowed grace period when they subsequently fail to do so. This is consistent with investors not accepting managements’ assertions in the late filing announcements at face value. In addition, abnormal returns continue to decline during the months following late filing announcements. Finally, operating performance also declines during the months following the delay announcement. We contribute to the literature by finding that delayed quarterly-filings have distinctly different valuation implications than delayed annual-filings; that accounting-problems play a unique role in signaling the seriousness of the delay; that the market does not naively accept managements’ delay-related assertions at face value; and that delay announcements signal continued poor performance.

Banking Output & Price Indicators from Quarterly Reporting Data

The measurement of banking output (and therefore productivity) has long been controversial. This article applies the user cost approach in Fixler and Zieschang (1999) to quarterly reporting data from Luxembourg's banking sector. This requires associating the flows in the profit-and-loss account to different assets and liabilities in the balance sheet. The user cost of each asset/liability is then calculated as the difference between the at which it generates revenues/costs and a rate representing the opportunity cost of funds. A negative user cost then identifies an asset or liability as an output and a positive user cost identifies it as an input in the production process. In theory, this datadriven approach is capable of combining elements of both the two traditional approaches to measuring banking output (the production and intermediation approaches) since these classify inputs and outputs on an a priori basis. In practice, our results suggest that neither of these conventional approaches is wholly consistent with the data for Luxembourg. We then use multilateral Tornqvist indices to aggregate outputs and inputs separately and show that the resulting series are robust to alternative measures of the reference rate. The difference between the output and input index provides a measure of Total Factor Productivity (TFP) and an implicit price index is also derived. Results suggest that productivity growth in Luxembourg's banking sector has been high since the mid-1990s, displaying volatile but persistent dynamics and moving pro-cyclically. Productivity varies widely across banks but larger banks (in terms of total assets) tend to be more productive.

Determinants of the Timeliness of Quarterly Reporting: Evidence from Canadian Firms

This study examines the determinants of the timeliness of quarterly reporting in Canada. Based on prior research, we hypothesize that interim financial statements are released more promptly by companies with a high transparency of information environment than firms with a low transparency of information environment. We also hypothesize that firms with more agency problems are more likely to delay the disclosure of their interim financial statements than firms with less agency problems. We provide evidence that firms' information environment and agency problems are related to the timeliness of quarterly reporting. More interestingly, we find that firms that do not have their interim financial statements reviewed by their auditors are less timely in releasing their interim financial statements than firms having their interim financial statements reviewed, suggesting that firms may perceive the disclosure of no audit review as a negative signal to market participants and thus intentionally delay that disclosure.