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.