UCLA

This paper examines the relationship between mandatory reporting frequency and corporate myopia in the presence of informed trading. While previous studies attribute myopia to frequent reporting, the empirical evidence of this claim is inconsistent. The results herein show that corporate myopia can be sustained under both frequent and infrequent reporting regimes. I also demonstrate that the level of myopia can even increase as mandatory reporting frequency decreases when reporting noise is sufficiently high since less frequent reporting induces more informed trading. The results offer potential explanations for the mixed empirical findings regarding the relationship between mandatory reporting frequency and corporate myopia. Moreover, they are robust to extensions, including dynamic trading, different information structures, voluntary disclosure, or an alternative market structure. Overall, this study highlights that increasing mandatory reporting frequency does not always exacerbate corporate short-termism when additional information sources are taken into account.