Monetary secrecy and selective disclosure: The emerging market case of Mexico's monetary reporting

The International Monetary Fund (IMF) adopted a code of good conduct to increase the transparency of official operations in emerging markets, in part prompted by the 1994 peso and other emerging market crises. In the case of Mexico, its central bank increased monetary reporting from thrice a year to weekly monetary disclosures following the peso crisis. However, increasing evidence has established that emerging financial markets are strong form efficient with respect to public disclosures, implying substantial insider trading. This conclusion raises an important selective disclosure issue. If emerging market insiders can frontrun outside investors, asymmetric information costs increase, lessening the transactional and economic efficiency in the economy. This study's results suggest that the selective disclosure issue should be more widely discussed and addressed.