Posts Tagged ‘Renhui Fu’

Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity

Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday November 8, 2012 at 9:58 am
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Editor’s Note: The following post comes to us from Renhui Fu of the Rotterdam School of Management at Erasmus University, Arthur Kraft of the Cass Business School at City University London, and Huai Zhang of the Nanyang Business School at Nanyang Technological University.

In our paper, Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity, forthcoming in the Journal of Accounting and Economics, we examine the impact of financial reporting frequency on information asymmetry and the cost of equity. While it may seem obvious that more frequent disclosures will reduce information asymmetry and the cost of equity, this issue is more complicated. For one, more frequent financial reporting may encourage sophisticated investors to engage in private information acquisitions, resulting in a greater information asymmetry among investors. Alternatively, requiring more frequent reporting may reduce managerial voluntary disclosures, leading to a net loss of information. As such, it is an empirical question.

…continue reading: Financial Reporting Frequency, Information Asymmetry, and the Cost of Equity

 
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