We examine whether financial reporting frequency affects the speed with which accounting information is reflected in security prices. For a sample of 28,824 reporting-frequency observations from 1950 to 1973, we find little evidence of differences in timeliness between firms reporting quarterly and those reporting semiannually, even after controlling for self-selection. However, firms that voluntarily increased reporting frequency from semiannual to quarterly experienced increased timeliness, while firms whose increase was mandated by the SEC did not. We conclude that there is little evidence to support the claim that regulation forcing firms to report more frequently improves earnings timeliness.

Using hand-collected data on firms’ interim reporting frequency from 1951 to 1973, we examine the impact of financial reporting frequency on information asymmetry and the cost of equity. Our results show that higher reporting frequency reduces information asymmetry and the cost of equity, and they are robust towards considerations of the endogenous nature of firms’ reporting frequency choice. We obtain similar results when we focus on mandatory changes in reporting frequency. Our results suggest the benefits of increased reporting frequency.