Can Too Much Disclosure Hurt Profits and Innovation?
Some can adversely affect companies’ productivity and other performance indicators.
Can Too Much Disclosure Hurt Profits and Innovation?
Line of Inquiry: Haresh Sapra on How Quarterly Reporting Distorts Corporate Investment
- June 03, 2019
- CBR - Accounting
Transparency is an important feature of healthy markets, and regular financial reporting from public companies helps promote transparency in US equities markets. So is more-frequent reporting inevitably better than less-frequent reporting? Not necessarily, says Chicago Booth's Haresh Sapra. More-frequent reporting may lead to greater price efficiency, but it can also dissuade certain types of companies from making R&D investments that generate innovation and add to those companies’ value over the long run. Although compliance costs are often cited as a reason to cut down on the frequency of corporate reporting, those costs are minuscule in comparison to the value those would-be innovators forego as they try to keep quarterly profits in line with analysts’ expectations.
More from Chicago Booth Review
How Do Companies Measure Their CSR Impact?
Even without a mandated set of reporting standards, there is a degree of consistency around CSR metrics.
How Do Companies Measure Their CSR Impact?
In Accounting, Less Information Can Be More Useful
Too much detail can overload investors, to the detriment of their decision making.
In Accounting, Less Information Can Be More UsefulMore from Chicago Booth
Your Privacy
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.