Frequency of interim financial reporting and investment efficiency

Purpose This study investigates whether mandatory increases in the interim reporting frequency affect investment efficiency. Design/methodology/approach We use a sample of Taiwanese publicly traded firms and divide the sample into three reporting regimes: semi-annual, quarterly, and monthly. We use OLS regressions to examine how firms’ changing reporting frequency affects investment efficiency, as measured by deviations from the expected investment level. Findings Firms that switch from semi-annual to quarterly reporting and from quarterly to monthly reporting are more likely to engage in inefficient investment decisions. Further, more frequent reporting, particularly monthly reporting, is positively related to overinvestment decisions. The main results are robust, based on a range of measures of investment efficiency and controls for potential self-selection bias. Originality/value Most studies investigate the economic consequences of mandatory reporting frequency, focusing almost exclusively on developed economies. This study has implications for the literature on financial reporting regulations and can be generalized to other emerging economies. Specifically, this study adds to the literature on reporting frequency by examining monthly reporting as mandatory for Taiwanese firms.