No abstract

High disclosure quality can be achieved through an effective investor-relations program and results in firm benefits such as enhanced market exposure, increased analyst coverage and institutional following. We examine the association between disclosure quality and information asymmetry where a checklist was used to evaluate a firm's Internet-based investor-relations practices. Firms with higher disclosure quality through their investor-relations activities have higher analyst following, more institutional shareholders, more active trading, and are larger in terms of market capitalisation. Bid-ask spread decreased with increased disclosure quality, although the effect of investor relations was weaker in the presence of other factors.

We investigate IFRS non-GAAP earnings adjustments for fair value remeasurements made by companies and analysts and the usefulness of these disclosures for analysts. Examining Australian listed (ASX 200) companies during 2008-2010 (576 firm-years), we find that companies disclosing non-GAAP earnings are more likely to have a higher incidence and magnitude of profit or loss items reflecting asset remeasurements and impairment in their financial statements. We find non-GAAP disclosing companies are more likely to have analyst adjustments to earnings for these items and lower forecast error and dispersion in the following year, suggesting usefulness rather than opportunism in the adjustments.