Corporate reporting frequency and long-term value creation

Abstract

This paper discusses the impact of high-frequency corporate reporting on long-term value creation from an asset manager's perspective. We argue that mandatory quarterly reporting, and the associated pressure on management to meet earnings guidance, can lead to short-term decision-making. This hinders sustainable growth and innovation, and may deter companies from accessing public markets. The paper proposes a shift towards higher quality semi-annual reporting, supplemented by continuous disclosure of material information, to better align managerial and investor behaviour with long-term investment and value creation. The paper also highlights the benefits of high-quality corporate reporting in providing transparency, enhancing investor decision-making, and supporting companies’ long-term strategic planning. It examines various jurisdictional approaches to reporting frequency, noting a trend towards deregulation of quarterly reporting to encourage long-termism and reduce reporting burden. It explores how optimised reporting frequency can benefit management decision-making, particularly in R&D-intensive industries, support institutional investors' engagement strategies, and potentially encourage more companies to list and remain public. The paper concludes with recommendations for optimising reporting frequency, alongside high-quality corporate disclosures, to achieve sustainable financial outcomes for companies, investors, and the broader economy.