The Deregulation of Quarterly Reporting and Its Effects on Information Asymmetry and Firm Value

Vanessa Behrmann, Lars Hornuf, Daniel Vrankar and Jochen Zimmermann

No 9344, CESifo Working Paper Series from CESifo

Abstract: In this article, we investigate accounting deregulation and analyze whether a reduction in the minimum content requirements for quarterly reporting negatively impacts information asymmetry and reduces firm value. Taking advantage of one of the rare deregulating measures, namely the transposition of the EU’s Transparency Directive into German law, and using a novel dataset of firms listed on the Frankfurt Stock Exchange, we manually examine firms’ quarterly reports for their content elements and construct a new quarterly reporting measure with an ordinal quality dimension. The results show that deregulation reverses beneficial regulatory effects and, on average, increases information asymmetry and decreases firm value. We find that this effect is stronger for first-tier stocks, highlighting the importance of quarterly reporting for these firms. The results are robust to potential selection effects regarding firms’ choice of quarterly reporting content levels.

Keywords: quarterly reporting; disclosure deregulation; financial reporting; interim management statement; transparency directive (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9344

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