Does Disclosure Quality via Investor Relations Affect Information Asymmetry?

Millicent Chang, Gino D'Anna, Iain Watson and Marvin Wee
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Millicent Chang: UWA Business School, The University of Western Australia.
Gino D'Anna: UWA Business School, The University of Western Australia.
Iain Watson: UWA Business School, The University of Western Australia.
Marvin Wee: UWA Business School, The University of Western Australia.

Australian Journal of Management, 2008, vol. 33, issue 2, 375-390

Abstract: High disclosure quality can be achieved through an effective investor-relations program and results in firm benefits such as enhanced market exposure, increased analyst coverage and institutional following. We examine the association between disclosure quality and information asymmetry where a checklist was used to evaluate a firm's Internet-based investor-relations practices. Firms with higher disclosure quality through their investor-relations activities have higher analyst following, more institutional shareholders, more active trading, and are larger in terms of market capitalisation. Bid-ask spread decreased with increased disclosure quality, although the effect of investor relations was weaker in the presence of other factors.

Keywords: INVESTOR RELATIONS; INFORMATION ASYMMETRY; DISCLOSURE (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:33:y:2008:i:2:p:375-390

DOI: 10.1177/031289620803300208

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