Continuous disclosure and information asymmetry
Abstract
Purpose
This paper aims to examine whether firms with high information asymmetry disclose more information under a continuous disclosure regime, and, second, the paper examines whether continuous disclosures reduce information asymmetry.
Design/methodology/approach
The study models relations between continuous disclosures and information asymmetry using ordinary least squares regression and two-stage least squares regression.
Findings
The study finds firms with high information asymmetry disclose more information. Further, the study finds that disclosure in the presence of high information asymmetry increases asymmetry. Finally, while bad news increases information asymmetry, the disclosure of firm-specific good and bad news is associated with reduced information asymmetry.
Originality/value
The paper identifies conditions under which Continuous Disclosure Regime increases information in markets and influences information asymmetry.
Keywords
Acknowledgements
The author is grateful for helpful comments on this paper from Pete Clarkson, Greg Clinch, Dan Collins, Robert Czernkowski, Dan Dhaliwal, Jere Francis, Zoltan Matolcsy, Stephen Taylor, Terry Walter, Joe Weber, Peter Wells, Anne Wyatt and participants at the AFAANZ Conference 2010 in Christchurch, the American Accounting Association Annual Meeting 2010 in San Francisco, and the University of Technology Sydney seminar series. The author acknowledges financial support from the UTS School of Accounting and FIRN. Data supplied by the Securities Industry Research Centre Asia-Pacific on behalf of the ASX and Aspect Financial.
Citation
Russell, M. (2015), "Continuous disclosure and information asymmetry", Accounting Research Journal, Vol. 28 No. 2, pp. 195-224. https://doi.org/10.1108/ARJ-11-2013-0085
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited