Regulation Fair Disclosure, Analyst Following and Analyst Forecast Dispersion

Abstract:     
This paper presents preliminary evidence of the effect of Regulation Fair Disclosure (FD) on the quantity and quality of firm-specific information released to the market by comparing analyst forecast data from pre-FD to post-FD time periods. By prohibiting selective disclosure of material information to privileged individuals, the Securities and Exchange Commission intends to provide a level playing field to all investors. However, opponents argue that FD has a negative impact by decreasing the quantity and quality of publicly available information. Consistent with this argument, we document a decrease in analyst following and an increase in forecast dispersion following the passage of FD.

Keywords: regulation FD, analyst following, analyst forecast dispersion

JEL Classifications: G1, G29, G38, M41

Accepted Paper Series