How Frequent Financial Reporting Can Cause Managerial Short-Termism: An Analysis of the Costs and Benefits of Increasing Reporting Frequency

• 成果类型: Article
• 署名作者: Gigler, Frank; Kanodia, Chandra; Sapra, Haresh; Venugopalan, Raghu
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; University of Chicago; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12043
• 发表日期: 2014
• 页码: 357-387
• 关键词: disclosure; MARKET; INVESTMENT; POLICY

摘要

We develop a cost-benefit tradeoff that provides new insights into the frequency with which firms should be required to report the results of their operations to the capital market. The benefit to increasing the frequency of financial reporting is that it causes market prices to better deter investments in negative net present value projects. The cost of increased frequency is that it increases the probability of inducing managerial short-termism. We analyze the tradeoff between these costs and benefits and develop conditions under which greater reporting frequency is desirable and conditions under which it is not.