Does Continuous Disclosure Improve Investment Efficiency? Evidence from a Unique Regulatory Setting

We examine the association between continuous disclosure and investment efficiency within the context of Australia's unique regulatory setting for continuous disclosure. Based on 8,527 firm-year observations, we find that continuous disclosure is positively associated with investment efficiency and helps to mitigate both over-investment and under-investment. Further analysis shows that this positive association is stronger in firms with better corporate governance, higher institutional investor ownership, and greater financial analyst coverage. Our results hold for both price-sensitive and non-price-sensitive categories of continuous disclosure. Finally, mediation analysis indicates that information asymmetry serves as a key channel through which continuous disclosure influences investment efficiency. Given its role as a critical disclosure mechanism, these findings contribute to the ongoing debate on the costs and benefits of continuous disclosure and have important implications for standard-setters, regulators, investment analysts, and firms.