Disclosure Information Asymmetry Continuous -Myassignmenthelp.Com

Question: Discuss About The Disclosure Information Asymmetry Continuous? Answer: Introduction Continuous disclosure regime or requirement of Australian Security Exchange (ASX) has much importance for the companies of Australia. According to this requirement, Australian companies have some specific obligation related to the disclosure of their share related information under the Lasting Rules 3.1 and 3.1A. According to this continuous disclosure requirement of ASX, it the responsibility of the business operations to inform about any specific information to ASX that may have material effect on the share prices of the companies (Hsu, Lindsay and Tutticci 2012). According to ASX, this disclosure obligation is necessary for the Australian companies to increase the integrity as well as efficiency of share market. However, it needs to be mentioned that there has been many questions related with the necessity and effectiveness of continuous disclosure framework of ASX for Australian companies. In order to establish the necessity of continuous disclosure framework for Australian compa nies, it is required to discuss about the importance of continuous disclosure framework. More specifically, it is required to discuss about the benefits that the Australian companies can avail by complying with the standards and principles of continuous disclosure framework. The main objective of this report is to prove the necessity and importance of continuous disclosure regime for the ASX listed companies. Thus, the literature review portion of this report shows the reasons for which it is important to have continuous disclosure regime. Based on the discussion, a conclusion is provided. Literature Review The above discussion states that Australian companies can avail many benefits by complying with the obligation of continuous disclosure requirement. Properly Informed Market: With the help of continuous disclosure framework, business organizations become able to release sufficient amount of information for the investors so that they can make accurate judgement about the share prices (Matolcsy, Tyler and Wells 2012). In this context, it needs to be mentioned that the companies should not release false or misleading information to the investors in order to attract large number of investors towards their companies. Apart from this, continuous disclosure framework makes the companies answer ot the market rumours and speculations that can have material impact on the share prices of the companies (Hermalin and Weisbach 2012). Timely Release of Information: The next major impact of continuous disclosure framework on the Australian companies is the timely release of information (Chapple and Truong 2015). This continuous disclosure obligation states that it is the responsibility of the companies to disclose information that are sensitive and have material effect on the share price as soon as it becomes known to them. However, companies are not required to follow this rule where disclosure can be withheld. Under the same principle, it is the obligation of the Australian companies to disclose the information timely when it is no longer legitimately withheld. Moreover, companies are required to timely answer any kind of marketing rumour or obligation related to price of the shares (Seamer 2014). Equal Access to Information: The framework of continuous disclosure helps all the investors become equally beneficial from equal access to the share related information of the Australian companies (Russell 2015). According to continuous disclosure framework, it is the obligation of the Australian companies to make all the price sensitive information available for all investors equally so that certain investors are not become advantageous or disadvantageous in comparison with others. This aspect helps in saving integrity of share market. In the absence of selective disclosure, ASX has become able to reduce the chances of insider trading related with the materially sensitive share information (Di Lernia 2014). It needs to be mentioned that this particular aspect helps in restoring the confidence of investors and shareholders in ASX. Premature Release: Another major advantage of having continuous disclosure framework is the prevention of premature release of information related to shares (Chang, Hooi and Wee 2014). It needs to be mentioned that the implementation of continuous disclosure framework helps in keeping a balance between the timely disclosures of material information about shares and the premature disclosure of share information that can be contributed to the emergence of false share market. In the absence of continuous disclosure framework, companies try to make a false market for their share and securities. For this reason, business organizations should not be involved in developing environment with the help of false and conflicting information about shares and securities (Chapple, Jubb and Lee 2012). Different Commercial Interests: The implementation of continuous disclosure framework helps in safeguarding the commercial interests of different parties involved in the transactions of share markets. With the help of the continuous disclosure framework, business organizations become able to keep a balance between the timely disclosures of sensitive material information of shares and safeguarding the commercial interest of the shareholders and investors (North 2014). For this reason, it is required for the Australian companies to maintain the confidentiality of share information. In safeguarding the commercial interests of the investors and shareholders, it has become possible to gain the faith of them in share market. For this particular reason, it is necessary for the Australian companies to comply with continuous disclosure framework (Tran 2015). Confidentiality of Information withheld from Disclosure: According to the framework of continuous disclosure, it is required for the Australian companies to maintain the confidentiality of sensitive share information that are being withheld from the shareholders and investors. Business organizations have the authority to spread sensitive information to their advisors and commercial partners; but these commercial partners and advisors do not have the authority to trade in the shares and securities of the company based on this information, as they are not available to the investors. This particular aspect implies that it is on the companies to maintain the confidentiality of the released information to the shareholders and investors (Di Lernia 2014). Enforcement and Remedies: The continuous disclosure framework helps the Australian companies in establishing enforcement provisions and remedies related to the sensitive material information for the shares. The implementation of continuous disclosure framework assists the companies in the establishment of clear and consistent guidance for the disclosure of price sensitive and material share information (Price 2014). More specifically, continuous disclosure framework sets some penalties for different kinds of circumstances related with the disclosure of share information by the Australian companies. In addition, the companies can get effective mechanism for the remedy of inadequate disclosure of sensitive and material share information. This aspect has its importance for the Australia companies in disclosing material and sensitive share information. From the above discussion, it can be seen that continuous disclosure framework has many necessities for the Australian companies. The implementation of continuous disclosure framework helps the business organizations in releasing adequate amount of information for the investors and shareholders so that they can take effective investment decisions (Riaz et al. 2013). Apart from this, it is the duty of the Australian companies to disclose prise sensitive and material information when they obtain them. All these aspects play a major role for the Australian companies to disclose the correct and relevant information in the share market. In addition, it can also be seen that the presence of continuous disclosure framework make the equal distribution of sensitive material information to the investors and shareholders. Thus, it can be observed that the continuous disclosure framework plays an integral part in the reduction of information asymmetry between the Australian companies and investo rs (Di Lernia 2014). Effective and timely disclosure is an effective tool for implementing governance in the companies related to the trading of shares. All these above-discussed aspects indicate that continuous disclosure framework plays an effective part for the Australian companies in disclosing share information that have material impact on the share prices of the companies. Conclusion From the above discussion, it can be observed that continuous disclosure framework has many positive roles to pay in the Australian firms. As per the above discussion, it can be seen that the presence of continuous disclosure framework provides great assistance to the investors in making effective investment decisions by disclosing price sensitive share decisions. On the other hand, timely release of information and equal access of information to the investors are two of the major positive of the implementation of continuous disclosure framework. The above discussion also shows that the implementation of continuous disclosure framework prevents the Australian companies in the release of premature information related to the price of the shares. Another major aspect is to maintain the confidentiality of price sensitive information related to shares. Thus, from the whole discussion, it can be concluded that the implementation of continuous disclosure framework is good for the developmen t of robust and effective equity market in Australia. For all these reasons, there is no place to disagree with the fact that it is necessary for all the Australian companies to have a continuous disclosure framework. References Annualreports.com. (2018).Annual Report 2015-16. [online] Available at: https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BAL_2016.pdf [Accessed 16 Jan. 2018]. Chang, M., Hooi, L. and Wee, M., 2014. How does investor relations disclosure affect analysts' forecasts?. Accounting Finance,54(2), pp.365-391. Chapple, E.L., Jubb, C. and Lee, J., 2012. Audit committee effectiveness in a mandatory disclosure environment. InProceedings of the 2012 Accounting and Finance Association of Australia and New Zealand Conference. Accounting and Finance Association of Australia and New Zealand (AFAANZ). Chapple, L. and Truong, T.P., 2015. Continuous disclosure compliance: does corporate governance matter?.Accounting Finance,55(4), pp.965-988. Di Lernia, C., 2014. Empirical Research in Continuous Disclosure.Australian Accounting Review,24(4), pp.402-405. Di Lernia, C.A., 2014. Faith/less? Market integrity and the enforcement of Australias continuous disclosure provisions. Hermalin, B.E. and Weisbach, M.S., 2012. Information disclosure and corporate governance.The Journal of Finance,67(1), pp.195-233. Hsu, G.C.M., Lindsay, S. and Tutticci, I., 2012. Inter?temporal changes in analysts forecast properties under the Australian continuous disclosure regime.Accounting Finance,52(4), pp.1101-1123. Investors.bellamysorganic.com.au. (2018).Annual Report 2017. [online] Available at: https://investors.bellamysorganic.com.au/FormBuilder/_Resource/_module/hwGxZyb3NkyBtC5tw1kqzQ/docs/reports/Bellamys_Annual_Report_2017.pdf [Accessed 16 Jan. 2018]. Matolcsy, Z., Tyler, J. and Wells, P., 2012. Is continuous disclosure associated with board independence?.Australian Journal of Management,37(1), pp.99-124. North, G., 2014. Listed Company Disclosure and Financial Market Transparency: Is this a Battle Worth Fighting or Merely Policy and Regulatory Mantra?.Browser Download This Paper. Price, J., 2014. Continuous disclosure.Governance Directions,66(1), p.6. Riaz, Z., Ray, S., Ray, P.K. and Kirkbride, J., 2013. Collibration as an alternative regulatory approach for remuneration governance: A contextual analysis of Australia.International Journal of Disclosure and Governance,10(3), pp.246-260. Russell, M., 2015. Continuous disclosure and information asymmetry.Accounting Research Journal,28(2), pp.195-224. Seamer, M., 2014. Does Effective Corporate Governance Facilitate Continuous Market Disclosure?.Australian Accounting Review,24(2), pp.111-126. Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in Australia?.Browser Download This P