Study Examines the Impact of Reporting Frequency

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May 23, 2017

On May 23, 2017, the CFA Institute released an article on a study that examines the impact of quarterly reporting of UK companies. Although some argue that quarterly earnings encourage short-term thinking, the findings of the study help to dispel that notion.

The authors of the study found that companies still invested for the long term even after they were required to start reporting on a quarterly basis.

The new CFA Institute Research Foundation brief “Impact of Reporting Frequency on UK Public Companies” examines the time period between 2007, when UK regulators began requiring quarterly reports from companies, to 2014, when they dropped that requirement. They found several effects associated with the two different approaches to reporting frequency.

Effect of Requiring and Not Requiring Quarterly Reporting

  • No difference in long-term investment activity
  • Quarterly reports became more qualitative than quantitative
  • More companies issued managerial guidance
  • Analyst coverage increased

Policy Recommendations

  • Going from quarterly to semi-annual reporting does not combat “short-termism”
  • Quarterly reports should be streamlined and include relevant metrics

Review the article on the CFA Institute's website.

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