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Allowing publicly traded European firms to report earnings annually instead of quarterly would let executives place greater emphasis on more strategic, long-term decision-making and could improve business performance, according to a panel of Europe’s leading economists.

The Initiative on Global Markets at the University of Chicago Booth School of Business asked its European IGM Economic Experts Panel to consider the effect of letting publicly traded European firms report earnings annually rather than quarterly.  Consisting of 50 economists and top researchers from 27 major universities and business schools across Europe and in the United States, Chicago Booth’s IGM panel regularly explores the extent to which economists agree or disagree on major public policy issues facing the economy.

Thirty four percent of the panel’s economists agreed that less frequent reporting would help executives place more weight on long-term issues in their investments and other decisions, which, in turn, could lead to better business performance. Twenty six percent were uncertain and a total of 14 percent disagreed.

“Board-level brain time needed to justify volatile results is reduced to an arguably more reasonable time span and redirected to longer horizons,” explained Jan Pieter Krahnen, Professor of Finance at Goethe University, Frankfurt. “This, on balance, may benefit shareholders.”

“Evidence suggests quarterly earnings reporting is too frequent,” agreed Patrick Honohan, Honorary Professor of Economics at Trinity College Dublin and former Governor of the Central Bank of Ireland.

However, the impact of less frequent financial reporting on shareholder returns is less clear. Here, 34 percent of the panel were uncertain if a switch from quarterly to annual earnings reports would, on net, benefit shareholders of European firms.

“It’s conceivable that moving to annual reporting from quarterly would have a net benefit for shareholders, but evidence is quite mixed,” says Chicago Booth’s Christian Leuz, director of the European IGM panel. “It's also important to note that quarterly reporting helps increase liquidity in secondary markets and improves monitoring.”

The panel’s goal is to explore views on some of the most important policy questions facing Europe—issues such as trade, migration, taxes, markets and competition—and to share these views directly with the public in a simple way.

Find more details about the full survey here.

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