A firm’s SEC-filed financial reports are accorded, on the whole, a substantially greater degree of prominence and
attention than other firm disclosures. For example, firm executives, under threat of legal sanction, are obligated to certify
the accuracy of these reports; independent accountants attest to the consistency of the financial statements’ presentation
and preparation with GAAP; and a wide variety of firm stakeholders intensely scrutinize and analyze these financial
reports as they seek to assess the timing, magnitude, and risk of a firm’s future cash flows. While the important role played
by financial statements in the economy is well recognized, relatively little academic attention has been paid to how the
frequency with which firms issue reports influences the decision making and actions of firm stakeholders. In this study, we
examine directly how the frequency of interim reporting affects two linchpins of fair and efficient resource allocation in
the economy—information asymmetry and the cost of equity.