This study examines the intra-industry information transfers effects associated with the disclosure of legal management application and the determinants of that effect in the security market. The sample firms are those that applied for the liquidation process to the court and the intra-industry ones matched in terms of the industry code. Specifically, abnormal returns of both legal management applied firms and intra-industry firms are analyzed surrounding the announcement weeks of the bad news. Weekly abnormal returns were computed employing both the market(equally-weighted index return) and industry stock index. In this study we try to increase reliability of the empirical result by improving in methodology of Choi and Na(2000). The results of this study reports that the legal management applied firms experienced significantly negative abnormal returns surrounding the announcement of the news. The information began to be reflected about seven weeks before it was formally announced. This results imply that some investors are predicting the information through other information sources and that insiders might sell stocks based on such undisclosed information(insider trading). But the intra-industry firms experienced insignificantly negative returns during the announcement week and one week after the announcement. This insignificant negative effects on the intra-industry firms’ stock price mean the intra-industry information transfers with the announcement of the application of the legal management firm news, indicating that the contagion effect don’t dominate the competition effect in the domestic security market. These results are different to prior studies. The determinants of the intra-industry information transfers between the legal management applied firms and the intra-industry firms included the earnings covariance between the two groups of the sample firms(COEFF), average leverage of the intra-industry firms(LEV), market structure characteristics(CR3) and average firm size(SIZE). The results indicate both the average leverage of intra-industry firms(LEV) and market structure characteristics (CR3) are significantly negatively related to the dependant variable, that is intra-industry firms’ average cumulative abnormal return (INDCAR). And is significantly positively relate average firm size(SIZE).