The Efficacy of Regulation Fair Disclosure

48 Pages Posted: 24 Jan 2006 Last revised: 30 Sep 2009

See all articles by Christopher Gadarowski

Christopher Gadarowski

Rowan University - Accounting & Finance

Praveen Sinha

California State University, Long Beach

Date Written: 12/12/2007

Abstract

An informational advantage enjoyed by select few around material announcements was the concern raised by SEC in passing Regulation Fair Disclosure. To date, no large study has examined this question. We document stock price movements in the direction of the news two days prior to the announcements in pre Reg. FD period. After Reg. FD, pre-announcement abnormal return as a percentage of total return has decreased by 26.1% (21.4%) for large firms with good (bad) news. These findings support both the premise and the intended purpose of the regulation for large firms. Our tests failed to detect any such support for small firms.

Keywords: regulation, public securities, management forecasts, private information

JEL Classification: G14, K22, L51, M4

Suggested Citation

Gadarowski, Christopher and Sinha, Praveen, The Efficacy of Regulation Fair Disclosure (12/12/2007). Available at SSRN: https://ssrn.com/abstract=877207 or http://dx.doi.org/10.2139/ssrn.877207

Christopher Gadarowski

Rowan University - Accounting & Finance ( email )

Glassboro, NJ 08028
United States
856 256-4500 x3468 (Phone)
856 256-4439 (Fax)

Praveen Sinha (Contact Author)

California State University, Long Beach ( email )

1250 Bellflower Blvd
Long Beach, CA 90064
United States