Paul A. Griffin, David H. Lont, Benjamin Segal
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. © 2011 The Authors. Accounting and Finance © 2011 AFAANZ.
Department of Management, Graduate School of Management, University of California, Davis, CA 95616, United States; Department of Accountancy and Finance, School of Business, University of Otago, Dunedin 9012, New Zealand; Department of Accounting and Control, INSEAD, Singapore 138676, Singapore
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