An Analysis of the Impact of Varying Levels of Interim Disclosure on Finnish Share Prices within Five Days of the Announcement

This research examines the relationship between interim reports submitted to the Helsinki Exchanges and the share prices of reporting firms over the over the period 1985-93. The purpose of this investigation is to determine the differences in magnitude and timing of price changes associated with three levels of voluntary disclosure: (1) less-than expected, (2) about-as expected and (3) greater-than expected. The findings are that price adjustments begin on the announcement day for firms that report in magnitudes about-as expected. The share prices initially rise above the association period value, confirming DeBondt & Thaler (1985). Then, share prices decline to the association period value, confirming Daniel, Hirshleifer & Subrahmanyam (1998). This helps resolve an apparent empirical conflict. The reaction is delayed by one day for firms reporting in less-than expected amounts. The market reaction is delayed three days for firms reporting in greater-than expected magnitudes. This provides the additional insight that the amount of interim information disclosed matters to the investor: a finding that contradicts the efficient markets hypothesis (Fama, 1970). This research is concerned with the magnitude of reporting, only. Further insights may be gained in subsequent research focusing on the quality of the reports