Trading off Costs and Benefits of Frequent Financial Reporting

摘要

Luca Pacioli, the Italian monk who is considered the father of doubleentry bookkeeping, wrote in 1494: "Frequent accounting makes for lasting friendship." Related to this observation, one economic effect in GKSV is that more frequent reporting imposes discipline on managers when deciding on investment. However, they examine a countervailing effect that more frequent reporting can lead to short-termism. The short-termism arises from short-term-oriented shareholders in a situation of asymmetric information about investment and imposes a real cost to the firm in equilibrium.