Corporate governance and reporting frequency: Hazards of more frequent reporting

Abstract

There has been little research that has examined any of the possible consequences of frequent financial reporting. In this paper, we discuss and provide theoretical explanations for two negative consequences associated with more frequent reporting. Based on search from psychology and sociology we theorize how more frequent reporting can lead to (1) goal seeking behavior by managers, (2) inaccurate predictions from investors (3) higher dispersion of investor beliefs and (4) higher uncertainty of investor beliefs.