How Does the Market React to Stock Exchange Listing Rule Waivers?

This paper examines the stock market reaction to the granting of listing rule waivers by the Australian Securities Exchange. I find that waivers convey significant news to the market and increase information asymmetry between investors. I further find negative abnormal returns around the granting of waivers that may be detrimental to shareholders, such as waivers of rules that restrict shareholder dilution and related party transactions. These results are stronger for non-standard waivers and waivers granted to firms with weak corporate governance. Overall, the results suggest that waivers impact a firm’s information environment and certain waivers are viewed negatively by investors