Quarterly versus Semiannual: Three Essays on Assessing the Impact of Reporting Frequency on Capital Markets

Authors

S M Mahamudul Islam, Florida International UniversityFollow

Document Type

Dissertation

Degree

Doctor of Philosophy (PhD)

Major/Program

Business Administration

First Advisor's Name

Clark Wheatley

First Advisor's Committee Title

Committee chair

Second Advisor's Name

Abhijit Barua

Second Advisor's Committee Title

Committee member

Third Advisor's Name

Pietro Bianchi

Third Advisor's Committee Title

Committee member

Fourth Advisor's Name

Suchismita Mishra

Fourth Advisor's Committee Title

Committee member

Keywords

Frequency of financial reporting, reporting frequency, quarterly reporting, semiannual reporting, earnings management, reporting quality, cost of debt, cost of equity, cost of operation, manager's investment patterns/behaviors, and information asymmetry

Date of Defense

6-21-2023

Abstract

This dissertation presents a trilogy of independent, but interrelated essays that focus on the capital market effects of mandatory semiannual reporting using a recent change in reporting frequency in the United Kingdom. This research critically evaluates the contentious issue of optimal reporting frequency, leveraging the unique U.K. setting with data drawn from annual, semiannual, and quarterly reports.

In Essay 1, "Financial Reporting Quality: Does Reporting Frequency Matter?", I examine the relationship between reporting frequency and financial reporting quality. Through comprehensive quantitative analysis, it is revealed that semiannual reporting is associated with higher accruals quality, reduced accruals manipulation, improved earnings persistence, and increased earnings smoothness compared to quarterly reporting. The results challenge existing beliefs by demonstrating an incremental improvement in financial reporting quality associated with less frequent reporting, and call for a reevaluation of existing reporting policies.

In Essay 2, "The Impact of Reporting Frequency on The Cost of Debt, Equity, and Operations", I investigate the consequences of reporting frequency on firms' cost structures. This analysis indicates that less frequent reporting leads to increased cost of debt, cost of equity, and operational costs. The research not only uncovers the financial and operational repercussions of less frequent reporting, but it also provides valuable insights for managerial decision-making and investor risk perception.

Essay 3, "Reporting Frequency Dynamics: Shaping Capital Allocation and Information Asymmetry", scrutinizes the impact of reporting frequency on capital allocation and information asymmetry. The evidence indicates that less frequent reporting prompts an increase in capital expenditure and fixed asset investment, countering short- termism. Contrary to the conventional belief, this study finds a decrease in information asymmetry following reductions in reporting frequency, and supports the contention that less frequent reporting facilitates long-term profitability focus.

Collectively, these essays provide a comprehensive examination of the multifaceted effects of reporting frequency, contributing substantial insights to accounting literature and praxis. By challenging existing assumptions, this dissertation not only stimulates further academic discourse but also offers valuable insights to regulators, policymakers, and market participants. It ultimately enriches our understanding of financial reporting dynamics, enhancing market integrity and economic stability.

Identifier

FIDC011205

Recommended Citation

Islam, S M Mahamudul, "Quarterly versus Semiannual: Three Essays on Assessing the Impact of Reporting Frequency on Capital Markets" (2023). FIU Electronic Theses and Dissertations. 5361.
https://digitalcommons.fiu.edu/etd/5361