Impact of earnings performance on price‐sensitive disclosures under the Australian continuous disclosure regime

Grace Chia‐Man Hsu

Accounting and Finance, 2009, vol. 49, issue 2, 317-339

Abstract: This study examines the relation between accounting earnings and the frequency of price‐sensitive corporate disclosure under Australia's statutory continuous disclosure requirements. Despite low litigation threats and excepting loss‐making firms, results show that firms with earnings declines (bad news) are more likely to make continuous disclosure than firms with earnings increases (good news). This suggests that market forces and regulators’ scrutiny are sufficient to induce a ‘bad news’ disclosure bias. This study also examines the ‘materiality’ requirement under the continuous disclosure requirements and finds a positive relation between disclosure frequency and the magnitude of earnings news. The earnings–return correlation is positively associated with disclosure frequency for the financial services industry.

Date: 2009
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https://doi.org/10.1111/j.1467-629X.2008.00288.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:49:y:2009:i:2:p:317-339

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