The Impact of New Zealand’s Statutory-Backed Continuous Disclosure Regime on Corporate Disclosure Behaviour

Dunstan, Keitha; Gallery, Gerry; Truong, Thu Phuong

doi:10.2139/ssrn.2046349

Cited by 5 publications

(6 citation statements)

References 56 publications

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“…This suggests that the continuous disclosure regulatory regime was more effective in the post-2000 period. The increased incidence of bad news forecasts post the increased regulation is consistent with the results of Dunstan et al (2006). However, they also found a significant increase in good news forecasts after the adoption of continuous disclosure in New Zealand.…”

Section: Management Earnings Forecastssupporting

confidence: 81%

“…to significantly increase the level of non-routine earnings forecast disclosure by Australian listed companies after 1 January 2000 Dunstan et al (2006). find a significant increase in non-routine management earnings forecast disclosure following the adoption of continuous disclosure in New Zealand.…”

mentioning

confidence: 85%

“…They find a substantial increase in profit warnings after the introduction of listing rules that are similar in spirit to Australia's continuous disclosure requirements. Dunstan et al (2006), investigate the effects of the introduction of New Zealand's continuous disclosure regime on management earnings forecasts. They conclude that disclosure behaviour in New Zealand has not altered substantially following the introduction of continuous disclosure.…”

Section: Management Earnings Forecastsmentioning

confidence: 99%

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Management earnings forecasts in a continuous disclosure environment

Chan

Faff

et al. 2007

Pacific Accounting Review

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Purpose -The purpose of this paper is to assess management earnings forecasts in a continuous disclosure environment. Design/methodology/approach -A large sample of hand checked Australian management earnings forecasts are examined. These data are analysed using a series of logistic regressions. Hypotheses are proposed and tested based on Skinner's litigation cost hypothesis. Increases in non-routine management earnings forecasts post-2000; and increases in the proportion of such forecasts that contain bad news are predicted. The relationship between forecast specificity and forecast news content is investigated. Findings -It was found that, post-2000, legislative changes and increased enforcement action by ASIC were followed by increased disclosure of non-routine management earnings forecasts. For routine forecasts, no significant increase in forecast disclosure is observed. This result is consistent with Skinner as is the finding that the increased disclosure is only apparent for bad news non-routine forecasts. For the second objective, evidence was found that the larger the gap between market expectations and actual performance the more specific the forecast, but only for bad news forecasts. Originality/value -The study extends the small amount of research investigating the characteristics of management earnings forecasts. It also provides an assessment of the effectiveness of efforts by ASIC to ensure that management meet their continuous disclosure obligations.

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Section: Management Earnings Forecastssupporting

confidence: 81%

mentioning

confidence: 85%

Section: Management Earnings Forecastsmentioning

confidence: 99%

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Management earnings forecasts in a continuous disclosure environment

Chan

Faff

et al. 2007

Pacific Accounting Review

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“…Prior earnings forecast theories and empirical research studies have largely focused on explaining firms' decision to issue earnings forecasts to pre-empt any expected change in earnings (Hirst, Koonce, and Venkataraman, 2008). Some of these studies have considered the difference between earnings forecasts that are routine and those are non-routine in nature in an attempt to refine this explanation (Chan, Faff, Ho, and Ramsay, 2007;Dunstan, Gallery, and Truong, 2008). In contrast to the trend of research investigating why firms decide to forecast earnings, our study seeks to examine how firms manage their earnings forecast strategy once they have decided to release earnings forecasts.…”

Section: How Do Firms Manage Their Earnings Forecast Strategy? a New ...mentioning

confidence: 99%

“…Empirical research shows that U.S. managers are more likely to issue the full content of bad news in one announcement relative to good news due to the strong culture of private litigation (Skinner, 1994;Kasznik and Lev, 1995;Soffer, Thiagarajan, and Walther, 2000;Baginski, Hassell, and Kimbrough, 2002). In contrast, such asymmetrical treatment between good news and bad news is not observed in other lower litigation risk environments such as Japan, Canada, and New Zealand (Baginski et al, 2002;Kato, Skinner, and Kunimura, 2006;Dunstan et al, 2008).…”

Section: Earnings Forecast Motivationmentioning

confidence: 99%

How Do Firms Manage Their Earnings Forecast Strategy? A New Zealand Study

2008

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The impact of disclosure reform on the NZX's financial information environment

Huang

Marsden

Poskitt

2009

Pacific-Basin Finance Journal

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This study investigates the impact of amendments to the New Zealand Exchange's listing rules and the Securities Markets Act 1988 enacted in December 2002. These reforms provided statutory backing for a continuous disclosure listing rule requiring companies to immediately release all price-sensitive information to investors. We follow the methodology employed by Helfin et al. (2003) to test the impact of Regulation FD in the US. Our results show that under New Zealand's continuous disclosure regime analysts' earnings forecast errors did not decline but that analysts' forecasts showed less dispersion in the post-reform period. In respect of informational efficiency, we find a smaller abnormal return around the annual earnings announcement date in the post-reform period for small companies. Our results suggest that the reforms have improved the flow of information to investors, consistent with the intent of the reform.

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The Impact of New Zealand’s Statutory-Backed Continuous Disclosure Regime on Corporate Disclosure Behaviour

Cited by 5 publications

References 56 publications

Management earnings forecasts in a continuous disclosure environment

Management earnings forecasts in a continuous disclosure environment

How Do Firms Manage Their Earnings Forecast Strategy? A New Zealand Study

The impact of disclosure reform on the NZX's financial information environment

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