An Examination of the Differential Impact of Regulation FD on Analysts' Forecast Accuracy

Abstract:     
Regulation FD requires companies to publicly disseminate information, effectively preventing the selective pre-earnings announcement guidance to analysts common in the past. We investigate the effects of Regulation FD's reducing information disparity across analysts on their forecast accuracy. Proxies for private information, including brokerage size and analyst company-specific experience, lose their explanatory power for analysts relative accuracy after Regulation FD. Analyst forecast accuracy declines overall, but analysts that are relatively less accurate (more accurate) before Regulation FD improve (deteriorate) after implementation. Our findings are consistent with selective guidance partially explaining variation in the forecasting accuracy of analysts before Regulation FD.

Keywords: disclosure, fair disclosure, earnings forecast accuracy, Regulation FD, RegFD, Regulation Fair Disclosure, Fair Disclosure rules, analysts, brokerage analysts, security analysts, analyst forecasts, corporate guidance, pre-announcement guidance

JEL Classification: G14, G18, G24, G29, G38

Accepted Paper Series