Differential Effects of Regulation FD on Short- and Long-Term Analyst Forecasts

Posted: 12 Jun 2009

See all articles by Sidney Leung

Sidney Leung

City University of Hong Kong (CityUHK) - Department of Accountancy

Bin Srinidhi

University of Texas at Arlington - Department of Accounting; City University of Hong Kong (CityUHK) - Department of Accountancy

Bikki Jaggi

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Date Written: 2009

Abstract

In this paper, we provide evidence that the quality of short-term analyst forecasts improved but the quality of long-term analyst forecasts deteriorated after the implementation of Regulation Fair Disclosure (FD). More specifically, our results show that the precision of the idiosyncratic information component of short-term forecasts improved in the post-FD period, whereas the precision of both the common and idiosyncratic information components of long-term forecasts declined. We attribute this result to the reduced disclosure of long-term, future-oriented information in the post-FD period. Thus our results support assertions by some analysts that FD has had a chilling effect on information that is relevant to long-term forecasts.

Keywords: Regulation FD, Analyst forecast, Idiosyncratic and common information

Suggested Citation

Leung, Sidney and Srinidhi, Bin and Jaggi, Bikki, Differential Effects of Regulation FD on Short- and Long-Term Analyst Forecasts (2009). Journal of Accounting and Public Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1418421

Sidney Leung (Contact Author)

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China
+852 2788-7924 (Phone)
+852 2788-7944 (Fax)

Bin Srinidhi

University of Texas at Arlington - Department of Accounting ( email )

Arlington, TX 76013
United States

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

Bikki Jaggi

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

100B Rockafeller Road
Piscataway, NJ 08854
United States

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