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

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  • Grace Chia‐Man Hsu

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.

Suggested Citation

  • Grace Chia‐Man Hsu, 2009. "Impact of earnings performance on price‐sensitive disclosures under the Australian continuous disclosure regime," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(2), pages 317-339, June.
    • Handle: RePEc:bla:acctfi:v:49:y:2009:i:2:p:317-339
    DOI: 10.1111/j.1467-629X.2008.00288.x
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    References listed on IDEAS

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    Cited by:

    1. Leonardo Fernandez, 2012. "Price Discovery, Investor Distraction and Analyst Recommendations Under Continuous Disclosure Requirements in Australia," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 1-2012, January-A.
    2. Karen Benson & Peter M Clarkson & Tom Smith & Irene Tutticci, 2015. "A review of accounting research in the Asia Pacific region," Australian Journal of Management, Australian School of Business, vol. 40(1), pages 36-88, February.
    3. Martina K. Linnenluecke & Jacqueline Birt & Xiaoyan Chen & Xin Ling & Tom Smith, 2017. "Accounting Research in Abacus, A&F, AAR, and AJM from 2008–2015: A Review and Research Agenda," Abacus, Accounting Foundation, University of Sydney, vol. 53(2), pages 159-179, June.
    4. Xiaomeng Charlene Chen & Ka Wai Choi & Sue Wright & Hai Wu, 2023. "The effectiveness of sanctions on disclosure regulation: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 3841-3872, December.
    5. Larelle Chapple & Victoria J Clout & David Tan, 2014. "Corporate governance and securities class actions," Australian Journal of Management, Australian School of Business, vol. 39(4), pages 525-547, November.
    6. Victoria J. Clout, 2017. "Corporate boards, monitoring and securities class actions: a pitch," Accounting Research Journal, Emerald Group Publishing Limited, vol. 30(3), pages 242-248, September.
    7. Stephen Taylor & Alex Tong, 2020. "How efficient is the market for Australian firms’ earnings information?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 4225-4255, December.
    8. Leonardo Fernandez, 2012. "Price Discovery, Investor Distraction and Analyst Recommendations Under Continuous Disclosure Requirements in Australia," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 3, July-Dece.
    9. Millicent Chang & Andrew B. Jackson & Marvin Wee, 2018. "A review of research on regulation changes in the Asia‐Pacific region," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(3), pages 635-667, September.

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