Title
Effects of Increased Reporting Frequency on Nonprofessional Investors’ Earnings Predictions
Department/School
Accounting
Date of this version
2012
Document Type
Article
Keywords
disclosure frequency, earnings forecasts, accuracy, investor confidence.
DOI
https://doi.org/10.2308/bria-50039
Abstract
More frequent financial reporting has been a topic of debate for many years. However, little evidence exists about the possible effects of more frequent reporting on investors’ decision making. Using a between-subjects experiment, this study analyzes how altering the timing or frequency of earnings reports - weekly, as opposed to quarterly reports - affects the accuracy and dispersion of earnings predictions by nonprofessional investors. This is important since regulators have identified nonprofessionals as a significant audience for financial reports. I hypothesize and find that more frequent reporting results in less accurate predictions and greater variance, particularly when a strong seasonal pattern exists. Finally, investors in the more frequent reporting condition self-reported that they were more influenced by older historical data - suggesting primacy effects - while those in the less frequent reporting condition self-reported that they were more influenced by the newer historical data suggesting recency effects.
Volume
24
Issue
1
Published in
Behavioral Research in Accounting
Citation/Other Information
Pitre, T. J. (2012). Effects of Increased Reporting Frequency on Nonprofessional Investors' Earnings Predictions. Behavioral Research in Accounting, 24(1), 91-107. https://doi.org/10.2308/bria-50039