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Enforcement and disclosure under regulation fair disclosure: an empirical analysis


  • Data availability: All data are from public sources.

  • We thank J. Birt, G. Boyle, J. Grundfest, B. Sidhu, T. Smith and an anonymous journal reviewer for their useful comments. Earlier versions have been presented at the Australian Graduate School of Management, the 10th Annual New Zealand Finance Colloquium, and the 2006 Accounting and Finance Association of Australia and New Zealand (AFAANZ) Annual Conference. All errors and omissions are ours.


While Regulation Fair Disclosure (FD) was designed to benefit investors by curbing the selective disclosure of material non-public information to ‘covered’ investors, such as analysts and institutional investors, it can also impose costs. This paper finds that FD levies three kinds of enforcement and disclosure costs. First, investors cannot recover as part of an SEC enforcement action the gains to covered investors from their alleged use of the non-public information. Second, investors lose because the market responds negatively to an SEC enforcement announcement. Third, investors suffer because some companies post their FD filings well after the due date, without earlier public disclosure.