Does Regulation FD Work? Evidence from Analysts’ Reliance on Public Disclosure

Posted: 13 Nov 2011 Last revised: 15 Feb 2012

See all articles by William Kross

William Kross

State University of New York (SUNY) at Buffalo - Department of Accounting

Inho Suk

State University of New York (SUNY) at Buffalo - School of Management

Date Written: October 27, 2011

Abstract

We examine how Regulation FD changed analysts’ reliance on firms’ public disclosure. Regulation FD is associated with a stronger analyst response to earnings announcements, management forecasts and conference calls – that is, analysts respond to these events more quickly, more frequently and with larger forecast revisions after FD. Further, following public disclosure, the decline in analyst forecast dispersion and forecast error accelerates after FD. We find no such changes either for foreign ADR firms or around several confounding events. Overall, Regulation FD levels the playing field between the analysts and individual investors, thereby promoting 'fair game' property of the market.

Keywords: public disclosure, analyst forecast revision, analyst forecast quality, regulation FD

JEL Classification: D10, G14, G29, M40, M41

Suggested Citation

Kross, William and Suk, Inho, Does Regulation FD Work? Evidence from Analysts’ Reliance on Public Disclosure (October 27, 2011). Journal of Accounting & Economics (JAE), Vol. 53, 2012. Available at SSRN: https://ssrn.com/abstract=1958707

William Kross

State University of New York (SUNY) at Buffalo - Department of Accounting ( email )

Buffalo, NY 14260
United States

Inho Suk (Contact Author)

State University of New York (SUNY) at Buffalo - School of Management ( email )

342 Jacobs Management Center
Buffalo, NY 14260-4000
United States
716-645-3215 (Phone)

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