MARKET REACTION TO QUARTERLY REPORTING OF LISTED COMPANIES IN SINGAPORE

Abstract

This paper hopes to shed greater clarity on the value of mandatory quarterly reporting and its impact on the Singapore market a decade after the landmark policy was administered. In plotting out the movements of average share return and turnover of our 1,421 sample quarterly observations throughout a 60 days window surrounding quarterly earnings announcement date, we observe significant spikes in average share return and turnover within the quarterly earnings announcement periods as compared to non-announcement periods. A regression approach is also adopted, with results showing strong evidences for the positive correlation between abnormal returns and unexpected earnings for our SGX Mainboard listed firms. We believe that these findings potentially indicate the usefulness and impact of quarterly earnings announcements in the Singapore market. Moreover, market reaction tests on additional voluntary disclosures found within quarterly earnings announcements are also conducted. We find statistically significant associations between three of these additional disclosures, and their corresponding unexpected earnings, with abnormal return. These additional disclosures are press releases (Positive), audit reviews (Positive) and the number of pages (Negative) within each quarterly financial statement. In relation to abnormal turnover, we find weak evidences for the marginal positive association between press releases and abnormal turnover. With the findings above in mind, we believe that this paper provides considerable empirical evidence highlighting the impact and usefulness of quarterly reporting in Singapore amidst the ongoing debate over its practicality, and suggests for the continuing mandating of quarterly reporting in Singapore, perhaps with a greater adoption of certain additional disclosures, such as audit reviews.