Financial Reporting and Information Asymmetry: An Empirical Analysis of the Sec's Information-Supplying Exemption for Foreign Companies

Posted: 5 Jun 1995

See all articles by Andrew W. Alford

Andrew W. Alford

Goldman, Sachs & Co.

Jonathan D. Jones

Government of the United States of America - Office of Thrift Supervision

Abstract

This paper examines empirically the effect of SEC registration and reporting requirements on information asymmetry. We compare the adverse-selection component of the bid-ask spread our measure of information asymmetry for three samples of companies listed on NASDAQ that are subject to different levels of disclosure requirements: registered U.S. companies registered non-Canadian foreign companies and unregistered non-Canadian foreign companies covered by the information-supplying exemption of Rule 12g3-2(b) of the Securities and Exchange Act of 1934. After controlling for other determinants of adverse-selection we find that adverse- selection is lower for the foreign companies than for the U.S. companies and that it is indistinguishable for the exempt and non-exempt foreign companies. We are unable to document that less stringent SEC registration and reporting requirements are associated with greater information asymmetry for foreign securities listed on NASDAQ.

JEL Classification: M41

Suggested Citation

Alford, Andrew W. and Jones, Jonathan D., Financial Reporting and Information Asymmetry: An Empirical Analysis of the Sec's Information-Supplying Exemption for Foreign Companies. Available at SSRN: https://ssrn.com/abstract=55487

Andrew W. Alford (Contact Author)

Goldman, Sachs & Co. ( email )

85 Broad Street
New York, NY 10004
United States
212-902-0867 (Phone)
212-357-6563 (Fax)

Jonathan D. Jones

Government of the United States of America - Office of Thrift Supervision ( email )

1700 G St. NW
Washington, DC 20552
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,919
PlumX Metrics