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The Impact Of Regulation Fair Disclosure On Information Asymmetry And Trading
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Book Synopsis The Impact of Regulation Fair Disclosure on Information Asymmetry and Trading by : Chiraphol N. Chiyachantana
Download or read book The Impact of Regulation Fair Disclosure on Information Asymmetry and Trading written by Chiraphol N. Chiyachantana and published by . This book was released on 2013 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the impact of Regulation Fair Disclosure (FD) on liquidity, information asymmetry, and institutional and retail investors trading behavior. Our main findings suggest three conclusions. First, Regulation FD has been effective in improving liquidity and in decreasing the level of information asymmetry. Second, retail trading activity increases dramatically after earnings announcements, but there is a significant decline in institutional trading surrounding earnings announcements, particularly in the pre-announcement period. Last, the decline in information asymmetry around earnings announcements is closely associated with a lower participation rate in the pre-announcement period and more active trading of retail investors after earnings releases.
Book Synopsis Regulation Fair Disclosure and Information Asymmetry by : Vesna Straser
Download or read book Regulation Fair Disclosure and Information Asymmetry written by Vesna Straser and published by . This book was released on 2002 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the institution of Regulation Fair Disclosure (FD) on October 23, 2000, the Securities and Exchange Commission (SEC) imposed higher transparency requirements on the voluntary disclosure practices of public companies. This paper investigates whether the regulation induced companies to commit to higher or lower levels of voluntary disclosures by studying the changes in information asymmetry. The analysis is based on the extant economic theory suggesting that increases in the quantity and/or quality of disclosures should reduce companies' levels of information asymmetry. We study two proxies of information asymmetry - the probability of informed trading and the adverse selection component of the spread. After the implementation of Regulation FD we find a significant increase in both proxies of information asymmetry and the probability of new information events that contain private information while the proportion of informed traders decreases. An analysis of the volume of disclosures shows that the regulation was successful in increasing the quantity of available public information. Combined with the previous results we are able to conclude that, at least initially, companies responded to the regulation by providing more public information of lower quality.
Book Synopsis Effect of Regulation Fd on Asymmetric Information by : Chun I. Lee
Download or read book Effect of Regulation Fd on Asymmetric Information written by Chun I. Lee and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: On 23 October 2000, the U.S. SEC put Regulation Fair Disclosure into effect. It requires companies to disseminate releases of material information to all investors, not selectively. Proponents of Regulation FD argued that the flow of information would improve; critics of the regulation asserted that Regulation FD would increase volatility and reduce the quantity of information being released into the market, resulting in an increase in asymmetric information. We examined components of the bid-ask spread surrounding news releases and trading activity by retail versus institutional investors before and after the institution of Regulation FD. Our results indicate no significant increase in volatility after Regulation FD, and we found little or no increase in the adverse-selection component of bid-ask spreads. Overall, our results do not support critics of Regulation FD.
Book Synopsis The Impact of Regulation Fair Disclosure on Investors' Prior Information Quality - Evidence from an Analysis of Changes in Trading Volume and Stock Price Reactions to Earnings Announcements by : Anwer S. Ahmed
Download or read book The Impact of Regulation Fair Disclosure on Investors' Prior Information Quality - Evidence from an Analysis of Changes in Trading Volume and Stock Price Reactions to Earnings Announcements written by Anwer S. Ahmed and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that Regulation Fair Disclosure has reduced differences in information quality between investors prior to quarterly earnings announcements consistent with the intent of the regulation. This reduction is driven by small firms and high technology firms, rather than the large firms targeted by the SEC, which suggests that selective disclosure among large firms may have been much more limited than what was presumed by proponents of FD. In addition, we document that FD has decreased the average information quality of investors in small and high technology firms in the period prior to an earnings announcement while having no lasting effect on other firms. Taken together these two results suggest that, for small and high technology firms, FD succeeded in eliminating selective disclosure but also lowered the average quality of information available about these firms.
Book Synopsis Regulation Fair Disclosure and Capital Structure by : Rei-Ning Chen
Download or read book Regulation Fair Disclosure and Capital Structure written by Rei-Ning Chen and published by . This book was released on 2009 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This study examines the impact of Regulation Fair Disclosure (FD) on corporate financing choices. Regulation FD puts more constraints on corporate disclosure in the equity market than in the debt market. After the regulation, although firms are no longer able to selectively disclose material information to market professionals in the equity market, they can still do so to banks and rating agencies in the debt market. Consistent with the expectation that FD affects firms differentially, I find substantial cross-sectional variation in changes in information asymmetry in the equity market. I further find that firms experiencing greater increases in information asymmetry increase their leverage more after FD. The results suggest that firms who cannot perfectly replace private disclosure with public disclosure are likely to experience increases in information asymmetry and that they may turn to the debt market for capital where private disclosure is still available.
Book Synopsis Impact of Disclosure Regulation on Information Asymmetry Case of Regulation Fair Disclosure by : Shyam V. Sunder
Download or read book Impact of Disclosure Regulation on Information Asymmetry Case of Regulation Fair Disclosure written by Shyam V. Sunder and published by . This book was released on 2002 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises Publisher : ISBN 13 : Total Pages :182 pages Book Rating :4.F/5 ( download)
Book Synopsis Fair Disclosure Or Flawed Disclosure by : United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
Download or read book Fair Disclosure Or Flawed Disclosure written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2001 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Information Asymmetry and Capital Structure by : Reining Petacchi
Download or read book Information Asymmetry and Capital Structure written by Reining Petacchi and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study uses Regulation Fair Disclosure (FD) as a plausibly exogenous shock to the information environment to identify the causal effect of information asymmetry on corporate financing behavior. Although Regulation FD prevents firms from selectively disclosing material information to market professionals in the equity market, firms can still do so to banks and rating agencies in the debt market. The standard's differential disclosure requirements lead to differential changes in the information environments between the two markets, providing a reasonably useful setting to examine the effect of information asymmetry on firms' capital structure. I find that firms with a high level of information asymmetry increase debt more than firms with a low level of information asymmetry post-Regulation FD. The results suggest that managers adjust the target leverage ratios to rely more on debt when facing higher costs of equity.
Book Synopsis The Effects of Regulation Fair Disclosure on Management Forecasts by : Carla Carnaghan
Download or read book The Effects of Regulation Fair Disclosure on Management Forecasts written by Carla Carnaghan and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine management forecasts to determine whether Regulation Fair Disclosure has improved the quality and quantity of public disclosures. Management forecasts are voluntary, provide earnings guidance and are highly sought by investors and analysts. We find that the information disclosed by managers has improved in terms of frequency, specificity and verifiable information provided. We also find that Regulation Fair Disclosure has reduced information asymmetry, and information leakage prior to the release of the MEF. We find no evidence of greater returns volatility. Our results suggest that generally Regulation Fair Disclosure has achieved one of its stated goals of providing a more level playing field to all investors.
Book Synopsis Fair Disclosure and Investor Asymmetric Awareness in Stock Markets by : Zhen Liu
Download or read book Fair Disclosure and Investor Asymmetric Awareness in Stock Markets written by Zhen Liu and published by . This book was released on 2009 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: The notion of awareness is introduced to study Regulation Fair Disclosure, a rule implemented by the U.S. Security and Exchange Commission in 2000. The regulator aims to reduce information asymmetry among investors, and expects public forums to subsume the forbidden information channel of selective forums. We show that even with cooperative managers and effective technology, this is only possible under the assumption of symmetric awareness. If a professional investor is aware of more uncertainties than others are, lacking the incentive to share the insights, he would not raise critical questions and acquire relevant information at public forums. This leads to inefficient information production. We also analyze the market prices and investors' welfare under different disclosure forms and awareness assumptions. At last, we discuss the implications of asymmetric awareness on the overall benefit and cost, the empirical findings, and the policies of the regulation.
Book Synopsis Market Adaptation to Regulation Fair Disclosure by : Susana Yu
Download or read book Market Adaptation to Regulation Fair Disclosure written by Susana Yu and published by . This book was released on 2015 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Our fundamental research question is in understanding ways in which the financial markets have adapted to Reg FD, and our particular focus is on how market participants use industry information embedded in firms' earnings announcements. We find that announcements of quarterly earnings made by companies that are the first in their industry to report earnings in a given quarter have significant effects on the stock returns of other firms in the same industry as well as on their own stock returns. We then test the implications of these findings for their effects on the information environment. Overall, our empirical findings support the conclusion that the implementation of Reg FD has led to increased use of industry information that is revealed in earnings announcements. This is one way, among others, in which analysts and other market participants have adapted to the requirements of Reg FD. In this case, they have made the adaptation by developing new uses of public information to enhance the informational environment.
Book Synopsis The Effect of Regulation Fair Disclosure on Market Integration by : Surya Chelikani
Download or read book The Effect of Regulation Fair Disclosure on Market Integration written by Surya Chelikani and published by . This book was released on 2014 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent market crises have focused interest on methods to improve the functioning of financial markets. Before implementing new regulations, it is necessary to evaluate the effects of previous regulations. Regulatory changes such as Fair Disclosure have an effect on information dissemination and price discovery. This paper uses the information share of individual markets, to measure changes in the information contribution of markets before and after implementation of Regulation Fair Disclosure. Most of the existing studies focus on the price discovery process and the information contribution or share of the individual markets. This paper uses this information share as a metric to test the effect of a particular regulation. Employing cointegration analysis, this study measures the changes in the information share, impulse response functions, and tests whether Regulation Fair Disclosure has achieved its intended goal of greater informational parity and market integration. Results show that Fair Disclosure has increased the information share of satellite markets and achieved greater market integration.
Book Synopsis Regulation Fair Disclosure and the Cost of Adverse Selection by : Baljit K. Sidhu
Download or read book Regulation Fair Disclosure and the Cost of Adverse Selection written by Baljit K. Sidhu and published by . This book was released on 2012 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulation Fair Disclosure (FD), imposed by the Securities and Exchange Commission in October 2000, was designed to prohibit disclosure of material private information to selected market participants. The informational advantage such select participants gain is unclear. If multiple ldquo;insidersrdquo; receive identical information, private information is immediately incorporated in price and each insider has zero expected profit. If, on the other hand, Regulation FD has curtailed the flow of information from firms, private information becomes longer-lived and more valuable. Hence, market makers will demand increased compensation by widening the adverse selection component of the bid-ask spread. We identify the cost components of the bid-ask spread for a sample of NASDAQ stocks surrounding the implementation of Regulation FD. Controlling for other factors affecting the spread, we find that adverse selection costs increase approximately 36% after Regulation FD. We interpret our finding as Regulation FD failing to achieve one of its desired objectives.
Book Synopsis Re-examining the Effects of Regulation Fair Disclosure Using Foreign Listed Firms to Control for Concurrent Shocks by : Jennifer Francis
Download or read book Re-examining the Effects of Regulation Fair Disclosure Using Foreign Listed Firms to Control for Concurrent Shocks written by Jennifer Francis and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We re-examine the effects of regulation fair disclosure (Reg FD) using ADRs (who are exempt from Reg FD) to control for confounding events which affected all traded firms. Tests based on public information metrics (returns volatility, informational efficiency and trading volume) and on analyst information metrics (forecast dispersion and accuracy) suggest that Reg FD did not uniquely affect the US information environment. However, analyst report informativeness declined for US firms relative to ADR firms, providing evidence consistent with Reg FD achieving one of its objectives - reducing private information flows to analysts.
Book Synopsis Public Disclosure of Corporate Earnings Forecasts by : Francis A. Lees
Download or read book Public Disclosure of Corporate Earnings Forecasts written by Francis A. Lees and published by . This book was released on 1981 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Quality by : Jennifer Francis
Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.
Book Synopsis Commission Guidance on the Use of Company Web Sites (Us Securities and Exchange Commission Regulation) (Sec) (2018 Edition) by : The Law Library
Download or read book Commission Guidance on the Use of Company Web Sites (Us Securities and Exchange Commission Regulation) (Sec) (2018 Edition) written by The Law Library and published by Independently Published. This book was released on 2019-01-26 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Law Library presents the complete text of the Commission Guidance on the Use of Company Web Sites (US Securities and Exchange Commission Regulation) (SEC) (2018 Edition). Updated as of May 29, 2018 We are publishing this interpretive release to provide guidance regarding the use of company Web sites under the Exchange Act and the antifraud provisions of the federal securities laws. We are soliciting comment on issues relating to company use of technology generally in providing information to investors. This ebook contains: - The complete text of the Commission Guidance on the Use of Company Web Sites (US Securities and Exchange Commission Regulation) (SEC) (2018 Edition) - A dynamic table of content linking to each section - A table of contents in introduction presenting a general overview of the structure
