Working Paper Series

Abstract: This paper examines the tendency of initial issuers to exhibit lower levels of disclosure in their prospectuses ensuing relaxed disclosure requirements by the exchange. We focus on disclosure pertaining to issuers? corporate governance structures with the element of disclosure branched into quality and quantity which we find to be highly correlated. Despite general postulation that disclosure quality and quantity will decline after relaxation, our results suggest otherwise. The departure is however largely attributed to companies? responses to investors? demand for enhanced disclosure following high-profile corporate failures. Furthermore, we also investigate the association between cost-of-equity capital and the quality and quantity of disclosure. Our findings are consistent with economic theory which advocates a negative relationship between them, suggesting that disclosure levels have a part to play in asset-pricing models.