Effect of reporting frequency on the timeliness of earnings: the cases of voluntary and mandatory interim reports

This study provides evidence on how the frequency of ficial reporting affects the speed at which accounting information is reflected in price. The effect of reporting frequency on timeliness is ambiguous because voluntary and mandatory increases in disclosure can impact the informationgathering activities of intermediaries, and mandatory increases in disclosure affect the propensity of firms to make voluntary disclosures. Using a sample of 28,824 firmyear observations of reporting frequency for 195073, we find that information in annual earnings is impounded into price more quickly for quarterlyreporters than for semiannualreporters. We also isolate a subsample of firms that voluntarily increased their reporting frequency (voluntary increasers) and a separate subsample of firms that waited until more frequent reporting was mandated by the SEC (mandatory increasers). Prior to the increase in frequency, voluntary increasers had high information asymmetries and untimely earnings relative to control groups of firms in the same industry, but achieved improvements in timeliness following the increase in reporting frequency. On the other hand, information asymmetry and timeliness for mandatory increasers in the prefrequencyincrease period were similar to those of a control group, and mandatory increasers experienced a less pronounced increase in timeliness than did voluntary increasers. Our results suggest that attempts to mandate increases in reporting frequency do not materially improve earnings timeliness