Fair Disclosure and Open Market Briefings: Evidence from the Australian Stock Exchange

Abstract

Regulatory change in the USA (Regulation FD, 2000) establishes new requirements for full and fair disclosure by public companies. By contrast, Australia has operated continuous disclosure like that introduced in Regulation FD since 1996. Firms are required by law immediately to disclosure information that has a material effect on the firm's operating conditions. Refinement of these requirements took place in September 1999 when the Australian Stock Exchange established an "open briefing" to provide greater disclosure to the market on the reasons for the material changes announced by listed firms. This paper examines the first year of the new open briefing process. We find that open briefing firms are larger, have greater growth opportunities and higher debt than other firms. Abnormal trading volume and volatility is significantly highly during open briefings indicating they have information content although abnormal share prices are not significantly different from zero. Firm size and interest coverage are positively associated with the cross-sectional variation in abnormal return to the open briefing firm at the day of the open briefing.

Keywords: Corporate disclosures, open market briefings

JEL Classification: G14