Effects of Increased Reporting Frequency on Nonprofessional Investors' Earnings Predictions
44 Pages Posted: 5 Jun 2007
Date Written: June 5, 2007
Abstract
More frequent reporting has been a debated topic for several years. However, little is known about the possible effects of more frequent reporting on investors' decision making. Using a between-subjects experiment, I analyze how the frequency of reporting - weekly earnings, as opposed to quarterly earnings - affects the accuracy, dispersion and confidence intervals of earnings predictions by nonprofessional investors. I hypothesize and find that more frequent reporting results in less accurate predictions and larger dispersion of predictions for earnings with a strong seasonal pattern. I also hypothesize, but do not find support, that more frequent reporting significantly increases confidence interval widths among nonprofessional investors. Results indicate that investors in the more frequent reporting condition were overconfident despite their less accurate predictions than those in the less frequent reporting condition.
Keywords: disclosure frequency, earnings forecasts, accuracy, investor confidence
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