You are not currently logged in.
Access JSTOR through your library or other institution:
If You Use a Screen ReaderThis content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Effect of Regulation FD on Asymmetric Information
Chun I. Lee, Leonard Rosenthal and Kimberly Gleason
Financial Analysts Journal
Vol. 60, No. 3 (May - Jun., 2004), pp. 79-89
Published by: CFA Institute
Stable URL: http://www.jstor.org/stable/4480574
Page Count: 11
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Preview not available
On 23 October 2000, the U.S. SEC put Regulation Fair Disclosure into effect. It requires companies to disseminate releases of material information to all investors, not selectively. Proponents of Regulation FD argued that the flow of information would improve; critics of the regulation asserted that Regulation FD would increase volatility and reduce the quantity of information being released into the market, resulting in an increase in asymmetric information. We examined components of the bid--ask spread surrounding news releases and trading activity by retail versus institutional investors before and after the institution of Regulation FD. Our results indicate no significant increase in volatility after Regulation FD, and we found little or no increase in the adverse-selection component of bid--ask spreads. Overall, our results do not support critics of Regulation FD.
Financial Analysts Journal © 2004 CFA Institute