The Corporate Disclosure System requires the listed corporations make public corporate information such as business performance, financial status, merger, capital increase, etc. This information could influence stock prices, thus helping investors make informed decisions on the concerned company under their discretion.
The disclosure system settles asymmetric information inside the KRX markets, enhances fair securities trading and protects investors. Therefore, it is a key self-regulatory measure of the KRX.
The following are standard disclosure requisites in order for the proper implementation of self-regulatory policies within the market
To prevent flawed investment decisions, the latest business details of listed corporations must be made public. Outdated business details often trigger the spread of rumors, which cause the distortion of stock prices and unforeseen losses to investors. Ideally, business details should be disclosed immediately. Taking into consideration the nature of the information and its practicality, the disclosure regulations of the KRX specifies the matters to be disclosed on the same day and on the next day.
False, incomplete or vague information causes confusion and mistaken investment decisions. Therefore, it is essential to disclose accurate and complete information, i.e., including both favorable and unfavorable facts, and not to omit any significant details.
The disclosed information must be easily comprehensible and usable. Therefore, the information should be clearly stated, using language that is understandable to all investors and the general public, who may not have professional knowledge in finance or securities matters. In particular, to cover the diversity of investors participating in the stock market, listed corporations should use plain expressions rather than professional terms regarding their duties so that investors may easily understand their information to ensure the practical balance in the conveyance of information.
Since the main purpose of the disclosure system is to remove asymmetric information, the disclosed information must be accessible to all existing and potential investors equally. In order to accomplish this, business information should be made available to every investor at the time of disclosure by using an information communication medium to ensure balance. This would ensure fair trading and facilitate perfect competition in the stock market.
For this purpose, the KRX operates KIND (Korea Investor’s Network for Disclosure) System, which investors can access from anywhere and at anytime on the KOSDAQ Headquarters homepage (http://kind.krx.co.kr). This system has vastly improved the fairness of information communication.