Study Points To Short-Term Behavior Asssociated With Financial Reporting Frequency

While previous studies have reported a myriad of benefits to frequent financial reporting by corporation, a new study suggests negative impacts practitioners and regulators should consider.

Frequent financial reporting can impose significant costs by inducing myopic behavior

The study, from Arthur Kraft, City University in London, and Rahul Vashishtha and Mohan Venkatachaim at Duke University, suggests frequent reporting of corporate financial results can “impose significant costs by inducing myopic behavior, promoting short term decisions and distorting managerial investment decisions.”

In 1970 the government mandated quarterly financial reporting as opposed to yearly and semi-annual reporting.  There were many benefits of this move, all documented and touted in numerous academic studies. The report balances the positive impact of frequent...