On-Market Share Buy-Backs: ASX Disclosure Requirements and Compliance

摘要

Our paper investigates the compliance of Australian listed firms with the ASX disclosure rules for on-market share buy-backs. We find that firm compliance is reasonable for initial buy-back announcements, but poor for final buy-back notices. In the latter instance, the disclosure in the appropriate ASX notice is provided in only 53% of cases. Of significant concern is the even lower degree of final notice compliance (42%) for buy-backs tagged as having ‘unlimited’ duration. Across our total sample of 807 buy-backs, an alternative form of disclosure of buy-back completion is provided in 25% of cases, and no proper notification of either the initial announcement or the completion of the buy-back is provided in 12% of cases. In order to improve buy-back transparency, some legislative reform of the ASX rules is suggested including: discontinuing ‘unlimited duration’ buy-backs, restricting buy-back periods to a maximum of twelve months (after which a new buy-back process must be initiated), avoiding multiple simultaneous buy-backs, removing the requirement of daily buy-back notices in favour of more meaningful quarterly or monthly reports, and requiring greater disclosure in relation to foreign buy-backs.