The Capital Market Implications of the Frequency of Interim Financial Reporting: An International Analysis

56 Pages Posted: 30 Jan 2007

See all articles by Yaw M. Mensah

Yaw M. Mensah

Rutgers Business School - Newark & New Brunswick

Robert Werner

Rutgers Business School - New Brunswick

Date Written: October 2006

Abstract

This study examines empirically the extent to which the frequency of interim financial reporting affects stock price volatility over the course of the fiscal year in four countries with different interim reporting regimes: the United States and Canada with quarterly reporting, and Great Britain and Australia with semi-annual interim reporting. It is hypothesized that, in the tradeoff between timeliness and predictive value of the interim reports, semi-annual interim reporting will lead to lesser price volatility after accounting for other potential influences. These expectations are supported in the results found. Moreover, additional tests conducted on American ADRs of British and Australian companies show that those firms have higher volatility than comparable purely domestic firms in their home stock exchanges.

Keywords: Interim financial reporting, Semi-annual interim reporting, Stock price volatility, Quarterly financial reports

JEL Classification: G12, M41, M44 M47, F40, N20

Suggested Citation

Mensah, Yaw M. and Werner, Robert, The Capital Market Implications of the Frequency of Interim Financial Reporting: An International Analysis (October 2006). Available at SSRN: https://ssrn.com/abstract=959929 or http://dx.doi.org/10.2139/ssrn.959929

Yaw M. Mensah (Contact Author)

Rutgers Business School - Newark & New Brunswick ( email )

100 Rockafeller Road
Piscataway, NJ 08854
United States
848.445.4369 (Phone)
732.445.0351 (Fax)

HOME PAGE: http://business.rutgers.edu

Robert Werner

Rutgers Business School - New Brunswick ( email )

New Brunswick, NJ 08901
United States

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