Priority Dissemination of Public Disclosures

2015 ◽  
Vol 90 (6) ◽  
pp. 2235-2266 ◽  
Author(s):  
Bei Dong ◽  
Edward Xuejun Li ◽  
K Ramesh ◽  
Min Shen
Keyword(s):  
Price Discovery ◽  
Market Liquidity ◽  
Data Availability ◽  
Good News ◽  
Unintended Effects ◽  
Press Releases ◽  
Privileged Access ◽  
Playing Field ◽  
Public Disclosures ◽  
Reg Fd

ABSTRACT This study examines the unintended effects of a pre-Reg FD practice that gave a broad group of sophisticated market participants 15-minute earlier access to all corporate press releases than the general public. We find that roughly one-eighth of the price discovery to earnings announcements issued during regular trading hours was due to privileged access to information in earnings press releases, with the 15-minute priority dissemination contributing to just over 50 percent of price discovery from all privileged access. In addition, we find that transient institutions benefited from priority dissemination, especially when the earnings contained good news. Finally, consistent with economic theory, we find that intraday bid-ask spreads decreased post-Reg FD for firms that had sufficient market liquidity to allow trading opportunities during the 15-minute window. Our study has implications for current discussions on whether preferential information distribution by firms and information intermediaries creates an uneven playing field among investors. Data Availability: The data used in this study are available from the public sources identified in the paper JEL Classifications: D82; G14; K22; M45.

From Reprisals to Criminal Accountability: State Bias and the Prospects of Limiting War Through Law

2020 ◽  
Vol 7 (2-3) ◽  
pp. 365-388
Author(s):  
Pablo Kalmanovitz
Keyword(s):  
International Law ◽  
Central Element ◽  
War Crimes ◽  
Armed Conflicts ◽  
Unintended Effects ◽  
Laws Of War ◽  
Institutional Conditions ◽  
Playing Field ◽  
The Past ◽  
State Agents

Abstract Over the past 25 years, criminal prosecutions for war crimes have become a central element in the long-standing project of governing hostilities in international law. According to many, the threat of criminal prosecutions can be a general deterrent against violations of the laws of war, and can contribute more broadly to the diffusion and domestic appropriation of humanitarian norms. This article discusses some unintended effects of this “anti-impunity turn” in the laws of war in the context of non-international armed conflicts. Specifically, it examines the consequences of the fact that states typically have a monopoly over the means of legitimate criminal investigation for alleged crimes committed in their territory. Far from operating on a level playing field, criminal investigations in war contexts must be undertaken under institutional conditions that tend to favor state agents over non-state opposition groups. The article spells out some implications of this form of state bias and argues that it can contribute to exacerbate conflict and prolong violence in war.

Part II The New EU Prospectus Rules, 9 The Contents of the Prospectus: Non-Financial Information and Materiality

2020 ◽  
Author(s):  
de Serière Victor
Keyword(s):  
Capital Markets ◽  
Investor Protection ◽  
Tort Law ◽  
Financial Information ◽  
Good News ◽  
Level Playing Field ◽  
Playing Field ◽  
Prospectus Liability ◽  
Capital Markets Union ◽  
The Eu

This chapter addresses the non-financial information to be included in a prospectus, alongside an analysis of the fundamental concept of materiality. It examines some issues relating to non-financial information to be included in a prospectus under the new EU prospectus regime. A level playing field in terms of uniform investor protection within the EU accordingly has regrettably not been achieved. This chapter argues that the Prospectus Regulation could have achieved more by requiring Member States to impose certain uniform tort law requirements in their national prospectus liability regimes. Another topic addressed in this chapter relates to the possibility for offerors of securities to obtain liability protection by including exoneration clauses in prospectuses. The Prospectus Regulation does not regulate this topic, but the analysis in this chapter shows that the possibilities appear to be severely limited; practice in any event shows that exoneration is seldom (if ever) stipulated. The chapter concludes that all this appears to be relatively good news in terms of investor protection generally, but the lack of harmonisation stands in the way of a unified EU capital markets union.

Regulatory overkill? Short-sales ban in Korea

2016 ◽  
Vol 12 (5) ◽  
pp. 673-699
Author(s):  
Jaemin Kim ◽  
Joon-Seok Kim ◽  
Sean Sehyun Yoo
Keyword(s):  
Stock Market ◽  
Price Discovery ◽  
Short Selling ◽  
Market Liquidity ◽  
Informational Efficiency ◽  
Short Sales ◽  
Discovery Process ◽  
Content Type ◽  
Stabilizing Effect ◽  
Price Discovery Process

Purpose The authors investigate the 2008-2009 short-sales ban in Korea, one of the most comprehensive and restrictive short-selling bans worldwide. The purpose of this paper is to examine: whether the ban stopped a destabilizing effect, if there was any, of short-selling activities; whether the ban improved or deteriorated the informational efficiency or the price discovery process of the stock market; and whether the ban had any impact on market liquidity. Design/methodology/approach Multiple regression; vector autoregression analysis; and generalized autoregressive conditional heteroskedasticity analysis. Findings The authors find no evidence that short-sales have a market-destabilizing effect and thus, restricting short-selling has a market-stabilizing effect. On the contrary, the short-selling ban is associated with an increase in return volatility and a deterioration of the price discovery process, particularly for the stocks without derivatives traded on them. The authors also find evidence of a liquidity decrease for short-sale intensive stocks. However, the evidence is inconclusive as to whether the market efficiency and liquidity changes are solely the result of the short-sales ban or the compound effects of both the ban and the concurrent progress of the financial crisis. Originality/value The literature does not provide a conclusive view on the effects of short-sales or restrictions thereof on the stock market. Also, the existing research on recent worldwide shorting bans often lack empirical scope (e.g. 32 stocks for UK; three weeks for USA). In contrast, the short-sales ban in the Korean stock market, one of the most comprehensive and restrictive short-selling bans worldwide, lasted for eight months for all the listed stocks and is still in effect for financial stocks. The authors find no evidence that short-sales have a market-destabilizing effect and thus, restricting short-selling has a market-stabilizing effect.

Are Seemingly Self-Serving Attributions in Earnings Press Releases Plausible? Empirical Evidence

2013 ◽  
Vol 89 (2) ◽  
pp. 635-667 ◽  
Author(s):  
Michael D. Kimbrough ◽  
Isabel Yanyan Wang
Keyword(s):  
Attribution Theory ◽  
Poor Performance ◽  
Data Availability ◽  
Bad News ◽  
Specific Information ◽  
Press Releases ◽  
Cross Sectional ◽  
External Causes ◽  
Earnings Press Releases ◽  
Industry Peers

ABSTRACT Seemingly self-serving attributions either attribute favorable performance to internal causes (enhancing attributions) or poor performance to external causes (defensive attributions). Managers presumably provide such attributions in earnings press releases to heighten (dampen) investors' perceptions of the persistence of good (bad) earnings news, thereby increasing (decreasing) the market reward (penalty) for good (bad) earnings news. Building on attribution theory and prior research on earnings commonality, this study investigates cross-sectional differences in investors' responses to quarterly earnings press releases that contain seemingly self-serving attributions. Using a random sample of press releases from 1999 to 2005, we find that firms that provide defensive attributions to explain earnings disappointments experience less severe market penalties when: (1) more of the their industry peers also release bad news, and (2) their earnings share higher commonality with industry- and market-level earnings. On the other hand, firms that provide enhancing attributions to explain good earnings news reap greater market rewards when: (1) more of their industry peers release bad news, and (2) their earnings share lower commonality with industry- and market-level earnings. Collectively, our results demonstrate that investors neither ignore seemingly self-serving attributions nor accept them at face value, but rely on industry- and firm-specific information to assess their plausibility. Data Availability: Data are publicly available from the sources identified in the text.

The Disclosure of Non-GAAP Earnings Following Regulation G: An Analysis of Transitory Gains

2013 ◽  
Vol 28 (1) ◽  
pp. 77-92 ◽  
Author(s):  
Michael Baumker ◽  
Philip Biggs ◽  
Sarah E. McVay ◽  
Jeremy Pierce
Keyword(s):  
Unintended Consequence ◽  
Data Availability ◽  
Press Releases ◽  
Earnings Announcement ◽  
Earnings Per Share ◽  
Regulation G

SYNOPSIS We investigate how managers report one-time gains resulting from legal settlements and insurance recoveries in press releases following Regulation G. Regulation G may have had the unintended consequence of allowing managers to omit mention of these transitory gains, resulting in higher reported performance absent non-GAAP disclosure. We find that while managers generally provide some information about transitory gains in the earnings announcement, there is a large amount of variation in the granularity of the detail. For example, the vast majority of managers (88.5 percent) mention the gain in the earnings announcement, but few (34 percent) report non-GAAP earnings per share summary figures explicitly excluding transitory gains. This percentage is significantly lower than pre-Regulation G, where approximately 62 percent of firms reported non-GAAP earnings per share excluding the transitory gain. Interestingly, we find that gains are less likely to be carved out of earnings when there are no concurrent transitory losses, providing some evidence that there continues to be an opportunistic component of non-GAAP reporting following Regulation G. Data Availability: Data are available from sources identified in the text.

Do Analysts' Cash Flow Forecasts Mitigate the Accrual Anomaly? International Evidence

2014 ◽  
Vol 13 (1) ◽  
pp. 61-90 ◽  
Author(s):  
Elizabeth A. Gordon ◽  
Karin A. Petruska ◽  
Minna Yu
Keyword(s):  
Cash Flow ◽  
Common Law ◽  
Sample Selection ◽  
Earnings Forecasts ◽  
World Market ◽  
Data Availability ◽  
Accrual Anomaly ◽  
International Setting ◽  
Public Disclosures ◽  
Cash Flow Forecasts

ABSTRACT We investigate the role of analysts' cash flow forecasts in mitigating the accrual anomaly in an international setting. Based on a sample from 20 world market economies, we find less market overestimation of the accrual component of earnings for firms where analysts issue both cash flow forecasts and earnings forecasts, compared with firms where analysts only issue earnings forecasts. Further tests show that analysts' provisions of cash flow forecasts are more likely to be a mechanism that attenuates investors' fixations on earnings in common law countries as opposed to code law countries. This finding is consistent with cash flow predictions by analysts being useful in countries where public disclosures are the primary communication channels in the capital markets. We also find the accrual anomaly to be less severe when analysts provide more accurate cash flow forecasts in common law countries. Our results are robust to additional sensitivity tests, including controlling for potential sample selection bias and an endogeneity bias. JEL Classifications: G14, G15, M41. Data Availability: Data used are available from sources identified in the paper.

The Timeliness of Bad Earnings News and Litigation Risk

2012 ◽  
Vol 87 (6) ◽  
pp. 1967-1991 ◽  
Author(s):  
Dain C. Donelson ◽  
John M. McInnis ◽  
Richard D. Mergenthaler ◽  
Yong Yu
Keyword(s):  
Lower Incidence ◽  
Data Availability ◽  
Earnings Forecast ◽  
Litigation Risk ◽  
Prior Work ◽  
Press Releases ◽  
Analyst Earnings ◽  
Jel Classifications

ABSTRACT This study investigates whether the timely revelation of bad earnings news is associated with a lower incidence of litigation. The timeliness of earnings news is captured by a new measure based on the evolution of the consensus analyst earnings forecast. Holding total bad earnings news and other determinants of litigation constant, we find that earlier revelation of bad earnings news lowers the likelihood of litigation. This result holds for both settled and dismissed lawsuits. Further, we reconcile our findings with prior work that measures timeliness using managerial warnings via press releases. These tests suggest our findings are attributable to the ability of our timeliness measure to capture bad earning news revealed through disclosure channels beyond press releases. Data Availability: Data are available from public sources identified in the paper. JEL Classifications: K22; K41; M41.

Technological Peer Pressure and Product Disclosure

2018 ◽  
Vol 93 (6) ◽  
pp. 95-126 ◽  
Author(s):  
Sean Shun Cao ◽  
Guang Ma ◽  
Jennifer Wu Tucker ◽  
Chi Wan
Keyword(s):  
Product Development ◽  
Voluntary Disclosure ◽  
Earnings Forecasts ◽  
Peer Pressure ◽  
Data Availability ◽  
Test Results ◽  
Management Earnings Forecasts ◽  
Press Releases ◽  
Negative Relation ◽  
Proprietary Costs

ABSTRACT We introduce a firm-specific measure of the technological aspect of competition—technological peer pressure—and examine firm-initiated product development-related press releases. We argue that empirical examinations of the theorized negative relation between competition and disclosure require the type of voluntary disclosure to be relevant to the dimension of competition under examination to ensure that firms incur significant proprietary costs of disclosure. In other words, many types of disclosure do not provide actionable information to competitors and, thus, should not be affected by that dimension of competition. We expect a negative relation between technological peer pressure and product disclosure because the latter reveals firms' strategies, allocations, and progress of technological investments in product development to competitors. In contrast, we do not expect a negative relation between technological peer pressure and management earnings forecasts—the most common type of voluntary disclosure used in accounting research. Our test results are consistent with these expectations. Data Availability: All data are available from public sources. Our TPP Measure is available for download, please see the link in Appendix G.

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