Regulation Fair Disclosure And Information Asymmetry

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Regulation Fair Disclosure and Information Asymmetry

Author : Vesna Straser
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.:/5 (129 download)

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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.

Regulation FD

Author : Jill E. Fisch
Publisher :
ISBN 13 :
Total Pages : 26 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Regulation FD by : Jill E. Fisch

Download or read book Regulation FD written by Jill E. Fisch and published by . This book was released on 2015 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This chapter traces the development of the SEC's use of Regulation Fair Disclosure (FD) to address information asymmetry in the securities markets. The chapter describes the SEC's developing enforcement policy and notes, in particular, the SEC's efforts, through its selection and settlement of Regulation FD cases, to provide guidance to corporations and corporate officials about areas of key concern. The chapter concludes by highlighting current areas of particular importance, including disclosure of information through private meetings and the implications of technological innovations such as the internet and social media. The chapter is forthcoming in Research Handbook on Insider Trading (Stephen Bainbridge, editor).

The Impact of Regulation Fair Disclosure on Information Asymmetry and Trading

Author : Chiraphol N. Chiyachantana
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.:/5 (129 download)

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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.

Regulation Fair Disclosure and Capital Structure

Author : Rei-Ning Chen
Publisher :
ISBN 13 :
Total Pages : 71 pages
Book Rating : 4.:/5 (649 download)

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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.

Impact of Disclosure Regulation on Information Asymmetry Case of Regulation Fair Disclosure

Author : Shyam V. Sunder
Publisher :
ISBN 13 :
Total Pages : 124 pages
Book Rating : 4.:/5 (587 download)

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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:

Information Acquisition in the Era of Fair Disclosure

Author : Zhen Liu
Publisher :
ISBN 13 :
Total Pages : 37 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Information Acquisition in the Era of Fair Disclosure by : Zhen Liu

Download or read book Information Acquisition in the Era of Fair Disclosure written by Zhen Liu and published by . This book was released on 2016 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: As the cost of financial information dissemination continues to decline, investors, firms, and regulators are gradually adopting the principle of fair disclosure, which requires no preferential public disclosure. We use a simple model to examine the impact of this change on information acquisition with two alternative assumptions: (1) Investors have symmetric awareness about the underlying uncertainties, and (2) this awareness is asymmetric among them. Under the first assumption, the change reduces information asymmetry among investors and induces acquisition of high-quality information. Under the second assumption, however, the reduction of information asymmetry may be limited, and information acquisition is less efficient. Specifically, investors with high awareness may either acquire high-quality information at a higher cost or not acquire it; investors with low awareness only acquire low-quality information. The loss in overall information quality is greater when awareness asymmetry is moderate than when it is high or low; this causes information asymmetry between the insiders and outside investors as a whole. These results offer explanations for intriguing empirical findings regarding the effect of a recent accounting regulation (Regulation Fair Disclosure).

Information Asymmetry and Capital Structure

Author : Reining Petacchi
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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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.

Effect of Regulation Fd on Asymmetric Information

Author : Chun I. Lee
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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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.

Effective Company Disclosure in the Digital Age

Author : Gill North
Publisher : Kluwer Law International B.V.
ISBN 13 : 9041168184
Total Pages : 524 pages
Book Rating : 4.0/5 (411 download)

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Book Synopsis Effective Company Disclosure in the Digital Age by : Gill North

Download or read book Effective Company Disclosure in the Digital Age written by Gill North and published by Kluwer Law International B.V.. This book was released on 2015-10-16 with total page 524 pages. Available in PDF, EPUB and Kindle. Book excerpt: Effective corporate reporting and disclosure are critical in financial markets to promote vigorous competition, optimal performance, and transparency. This book examines whether existing disclosure frameworks in eight countries with the world's most significant securities exchanges achieve these objectives, and then, drawing on extensive empirical findings, identifies the policies and practices that contribute most to improving the overall quality of listed company reporting and communication. Contending that public disclosure of listed company information is an essential precondition to the long-term efficient operation of financial markets, the book provides analysis of such issues and topics as the following: - arguments for and against mandatory disclosure regimes; - key principles of periodic and continuous disclosure regulation; - tensions between direct and indirect investment in financial markets; - assumptions concerning the need to maintain a privileged role for financial intermediaries; - intermediary, analyst, and research incentives; - protection of individual investors; - selective disclosure; - disclosure of bad news; - the role of accounting standards; - public access to company briefings; - long term performance reporting and analysis; and - company reporting developments. A significant portion of the book provides an overview of disclosure regulation and practice in the United States, Canada, Germany, the United Kingdom, Japan, Hong Kong, Australia, and Singapore. A highly informative survey looks at company reports, disclosures, and websites of large listed companies, including Microsoft, Citigroup, Teck Resources, Deutsche Bank, BP, Sony, PetroChina Company, BHP Billiton, and Singapore Telecommunications. The book discusses common disclosure issues that arise across jurisdictions, provides valuable insights on the efficacy of existing disclosure regulation and practice, and highlights the important principles, processes, and practices that underpin best practice company disclosure frameworks. It will be welcomed by company boards and executives and their counsel, as well as by policymakers and scholars in the areas of corporate, securities, banking and financial law, accounting, economics and finance.

Fair Disclosure and Investor Asymmetric Awareness in Stock Markets

Author : Zhen Liu
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (129 download)

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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.

Management Forecasts, Regulation FD, Information Asymmetry and the Cost of Debt

Author : Boyoung Kim
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Management Forecasts, Regulation FD, Information Asymmetry and the Cost of Debt by : Boyoung Kim

Download or read book Management Forecasts, Regulation FD, Information Asymmetry and the Cost of Debt written by Boyoung Kim 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 firms' strategic management disclosure policy around debt offerings and its consequences on the cost of debt, considering Regulation Fair Disclosure (FD). Contrary to the literature on equity offerings, there is little evidence about whether debt offering firms increase their disclosure to reduce information asymmetry and how creditors evaluate management earnings forecasts. We find that firms issue more management disclosures around debt offerings and that the increase in management forecasts is more pronounced after Regulation FD. The results suggest that Regulation FD affects a firm's disclosure policy before debt offerings. We also find that firms with high information asymmetry release more management disclosures before debt offerings. Finally, our results show that creditors reward the increased public disclosures with a lower cost of debt, especially more for the firms with severe information asymmetry. In total, this paper adds some evidence to the literature in this area on debt offerings, where there is a lack of such evidence.

Fair Disclosure Or Flawed Disclosure

Author : United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
Publisher :
ISBN 13 :
Total Pages : 166 pages
Book Rating : 4.0/5 ( download)

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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 166 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Effects of Regulation Fair Disclosure on Management Forecasts

Author : Carla Carnaghan
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (129 download)

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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.

Information asymmetry, information precision, and the cost of capital

Author : Richard A. Lambert
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (32 download)

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Book Synopsis Information asymmetry, information precision, and the cost of capital by : Richard A. Lambert

Download or read book Information asymmetry, information precision, and the cost of capital written by Richard A. Lambert and published by . This book was released on 2009 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: The consequences of information differences across investors in capital markets are still much debated. This paper examines the relation between information differences across investors and the cost of capital, and makes three points. First, in models of perfect competition, information differences across investors affect a firm's cost of capital through investors' average information precision, and not information asymmetry per se. Second, the average precision effect of information that is heterogeneously distributed across investors is unlikely to diversify away when there exist many firms whose cash flows covary. Thus, better disclosure can reduce a firm's cost of capital. Third, the precision effect does not give rise to a separate information-risk factor. These points are important to empirical research in accounting and finance, as well as to regulators who debate future disclosure requirements and the consequences of prior requirements such as Regulation Fair Disclosure.

Regulation Fair Disclosure and the Cost of Adverse Selection

Author : Baljit K. Sidhu
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (129 download)

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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.

Does Information Asymmetry Affect Firm Disclosure?

Author : Wei Chen (PhD)
Publisher :
ISBN 13 :
Total Pages : 66 pages
Book Rating : 4.:/5 (113 download)

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Book Synopsis Does Information Asymmetry Affect Firm Disclosure? by : Wei Chen (PhD)

Download or read book Does Information Asymmetry Affect Firm Disclosure? written by Wei Chen (PhD) and published by . This book was released on 2018 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: I use a quasi-exogeneous shock to information asymmetry among shareholders to evaluate the effect of information asymmetry on corporate disclosure. In the post-Regulation FD period, the merger between a shareholder and a lender of the same firm provides a shock to the information asymmetry among equity investors, because Regulation FD applies to shareholders but not lenders. After the merger, the shareholder gains access to the firm-specific private information held by the lender. I first provide evidence that information asymmetry among shareholders increases after the shareholder-lender mergers. I then use a difference-in-differences research design to show that after shareholder-lender merger transactions, firms issue more quarterly forecasts (including earnings, sales, capital expenditure, EBITDA, and gross margin), and the quarterly earnings forecasts are more precise. This study provides direct empirical evidence that information asymmetry among investors affects corporate disclosure.

Market Adaptation to Regulation Fair Disclosure

Author : Susana Yu
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (13 download)

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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.