Private Disclosure in the Spanish Capital MarketEvidence from Financial Analysts and Investor Relations Directors

Resumen

The objective of this paper is to analyse cross-national differences in the predictive ability of This study analyses the market for voluntary information in the Spanish capital market. It covers the agents who operate in the capital market; the information which is disseminated; the perceptions of providers and users concerning the usefulness of financial information; the costs, benefits and importance of private channels for voluntary information; the different ways of supplying private information; how the market for information affects the behaviour of the capital market and how the information is disseminated. The evidence comes from semi-structured interviews with 18 financial analysts and 26 investor relations directors, and responses to 60 questionnaires, which were sent to all companies quoted on the Madrid Stock Exchange and to all financial analysts members of the Spanish Association of Financial Analysts, and a further 38 responses were obtained from a separate survey of investor relations directors. The results show that financial analysts and companies attach a positive value to the voluntary disclosure of private information through private channels largely because the costs associated with this are lower than for conventional channels, for both providers and users of financial information. The costs of possible competitive disadvantage, more than other factors, explain the existence of this 'parallel market' for voluntary information. In general our respondents and interviewees considered that the benefit from improved information flows outweighs the potential disadvantages from granting of privileged, price sensitive information to particular groups of users. These results are largely consistent with those from the UK. It is considered significant that we find the same phenomena in a different cultural and regulatory context.