On‐Market Share Buy‐Backs: ASX Disclosure Requirements and Compliance
University of Western Australia - UWA Business School; Financial Research Network (FIRN)
affiliation not provided to SSRN
Abacus, Vol. 48, Issue 1, pp. 31-58, 2012
Our paper investigates the compliance of Australian listed firms with the ASX disclosure rules for on‐market share buy‐backs. We find that firm compliance is reasonable for initial buy‐back announcements, but poor for final buy‐back notices. In the latter instance, the disclosure in the appropriate ASX notice is provided in only 53% of cases. Of significant concern is the even lower degree of final notice compliance (42%) for buy‐backs tagged as having ‘unlimited’ duration. Across our total sample of 807 buy‐backs, an alternative form of disclosure of buy‐back completion is provided in 25% of cases, and no proper notification of either the initial announcement or the completion of the buy‐back is provided in 12% of cases. In order to improve buy‐back transparency, some legislative reform of the ASX rules is suggested including: discontinuing ‘unlimited duration’ buy‐backs, restricting buy‐back periods to a maximum of twelve months (after which a new buy‐back process must be initiated), avoiding multiple simultaneous buy‐backs, removing the requirement of daily buy‐back notices in favour of more meaningful quarterly or monthly reports, and requiring greater disclosure in relation to foreign buy‐backs.
Number of Pages in PDF File: 28
Keywords: ASX announcements, Buy‐backs, Compliance, Information disclosure, Share repurchasesAccepted Paper Series
Date posted: March 14, 2012
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