A Forensic Analysis of Failed Continuous Disclosure in Action

MGSM Working Paper No. 2006-15

38 Pages Posted: 2 Jan 2007

See all articles by Tyrone M. Carlin

Tyrone M. Carlin

Southern Cross University; The University of Sydney Business School

Date Written: November 2006

Abstract

The ASX Listing rules and various provisions of the Corporations Act require that listed corporations keep capital markets informed (subject to carve out provisions) of any information that a reasonable person would expect to have a material impact on the price or value of its securities. An effective continuous disclosure regime represents a key element of a framework for facilitating informed markets. As such, evidence on the extent to which the continuous disclosure regime is functioning is of significance to the regulatory and investment communities alike. This paper questions whether the Australian continuous disclosure regime is working and being enforced at an appropriate level, by forensically reviewing the affairs of listed wine producer Evans & Tate limited during that firm's ill fated 2005 financial year. It is argued that while the firm did indeed continuously disclose financial and non financial information as required, much of the content of that disclosure was misleading. Despite this, no regulatory action has been taken against the firm or its directors. It is therefore concluded that there may be serious deficiencies in the operation of Australia's continuous disclosure framework, particularly in relation to the nature of regulatory responses to apparent breaches of the system.

Keywords: Corporate Governance, Continuous Disclosure, Informed Markets, Financial Statement Analysis, Regulation

Suggested Citation

Carlin, Tyrone M., A Forensic Analysis of Failed Continuous Disclosure in Action (November 2006). MGSM Working Paper No. 2006-15, Available at SSRN: https://ssrn.com/abstract=954433 or http://dx.doi.org/10.2139/ssrn.954433

Tyrone M. Carlin (Contact Author)

Southern Cross University ( email )

Lismore, New South Wales 2480
Australia

The University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia
+ 61 2 9036 7230 (Phone)
+61 2 9351 7471 (Fax)

HOME PAGE: http://sydney.edu.au/business/staff/tyronec

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